Transferring LLC ownership in Washington can be a simple process if done properly. Here's a complete guide on how to transfer ownership of your LLC in the state of Washington.
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Step 1: Review Your LLC’s Operating Agreement
An LLC operating agreement outlines how the transfer of ownership should be handled. If your LLC doesn't have an operating agreement, you should refer to Washington state laws.
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* **Sections to Look for in An Operating Agreement -** Transfer sections most commonly included in an LLC operating agreement relate to the following factors:
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* Does **the LLC’s membership interest** need to be assigned, sold, or both?
* Should **the LLC members approve whatever transaction** is going to happen?
* Should price, payment terms, and other considerations be specified in most cases?
* Is state law required to follow when there are vacating rights? These rights enable current members the right to purchase all or some of the member's interest/ownership.
Step 2: Find a Buyer
If you're transferring ownership to someone in particular, such as a family member, this process is much easier. If you're more interested in outside investors, you can work with a business broker, attorney, accountant, or an LLC management company, who can help you find qualified potential buyers through their network.
Step 3: Price the LLC Purchase
Once you've determined the value of your LLC. As an LLC owner, consider issues such as revenue streaming, intellectual property, balance sheets, target demographic, business momentum, etc.
Then, provide terms that are adequate for the selling price. Even if you decide to transfer rather than sell ownership, there could be tax consequences for either the buyer or the seller. So, careful consideration should be taken for both.
Step 4: Draft the Purchase Agreement
A Purchase Agreement describes the details of the agreement between you and the new business owner. Check **this** site for a detailed guide on drafting a Purchase Agreement to get started.
Step 5: Notify the State of Washington of the Ownership Change
According to Washington State law, when LLC ownership changes; it must be notified tax corporation or the department in writing via mail. All changes of ownership in an LLC must be extra-verified utilizing the Florida Department's form RAT-17 to guarantee a legal business entity provision that complies with state laws.
Select a responsible member to create a mailed LLC55 form and formally mailed into the State of Washington with legal confirmation. The WA state requires only one signer. Proof-of-mail is mandatory because you'll need proof of your filing when accounting LLC taxes at end-of-year.
Step 6: Apply for a New Employer Identification Number (EIN)
LLCs are viewed as a new entity when purchased, which serves as standalone LLC business even if ownership is transferred legally. Contact the IRS for more information on obtaining a new EIN.
**Important Note:\\**
LLC management and the registered agent of the organization should be informed of this process beforehand to ensure that all administrative tasks are covered. Form LLC-5 specifically requires both the President, Vice-president, and the former owner to sign everything. All registered agents of any LLCs have full knowledge about the company. They may give informed advice regarding the cancellation, transfer, or notion of re-formation.
Conclusion
Transferring LLC ownership in Washington is a seamless process, following the right steps can help you and the buyer avoid unwanted legal issues. For most LLCs, initiate the entire process weeks or even months in advance as most companies would turn out much simpler if roles and events would follow suit legally. While this article was made to be proven beneficial many times before, always seek an advisory respectively when it comes to legal proceedings upon the exchange obligation. Once taken care of, buyers and sellers alike can get back to business without interruption.
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