How to Transfer LLC Ownership in Ohio: 2024 Updates


Steve Bennett
Steve Bennett
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Transfer LLC ownership in Ohio

If you have an LLC in Ohio and you wish to discontinue it, you don’t always have to dissolve it. You can transfer the ownership, and it will keep running the way it was. Transferring ownership of a Limited Liability Company (LLC) in Ohio is a relatively simple and straightforward process involving minimal paperwork. It can be partially or fully transferred to another owner.

LLCBuddy editors shared a step-by-step guide on how to transfer ownership of an LLC in Ohio. The steps might seem easy and doable. However, these are general steps and might need special attention for specific cities or regions in Ohio. Hence, it is recommended to consult an attorney or legal expert before taking the steps.

How an LLC Ownership Structure Works in Ohio

By now, you must know that a limited liability company is one of the simplest forms of business structure. The ownership and transferring it to others is even simpler. For an LLC in Ohio or any other state in the United States, the company is considered an independent entity that is separated from its owners, which means the owners are not personally liable for the company’s debts or legal obligations.

The ownership structure of an LLC in Ohio is determined by the percentage of ownership interests held by each member. These ownership interests can be distributed however the members see fit and are typically outlined in the Operating Agreement drafted in Ohio.

There is no maximum limit on the number of members an LLC in Ohio can have, and the members can be individuals, other LLCs, corporations, or even foreign entities. This flexibility allows for a wide range of business structures, from single-member LLCs in Ohio to large, multi-member LLCs with complex ownership arrangements.

What is Ohio LLC Buy-Sell Agreement in Ownership Transfer?

In Ohio, the buy-sell agreement is a part of your operating agreement. It explains the instructions for buying and selling the LLC ownership. For example, who can be the member of Ohio LLC, how will buy out and sell of the LLC be determined, whether the members of the LLC in Ohio will buy the shares of the leaving owner, and how – these are the points you have in the buy-sell agreement. 

Buy Out Ohio LLC or Partial Transfer: In this case, the members of the LLC generally buy the shares of the owner who is leaving. As the LLC buys the owner’s interests, the shares get divided equally among the remaining Ohio LLC members. LLC members must approve the transfer, and then the Operating Agreement (OA) will be updated to exclude the departed owner.

If your LLC operating agreement does not specify these terms beforehand, you must follow Ohio state LLC law. In some states, ownership transfer does not simply take place. Instead, they have to dissolve the LLC to continue with the process. So, while you’re forming an Ohio LLC, make sure to create a buy-sell agreement beforehand.

Sell a Ohio LLC Or Fully Transfer: Selling an LLC or Fully Transferring the ownership is a bit more complicated than the buy-out process. In this condition, owners have the independent legal right to sell the interest to any third party. They do not need other members’ approval for this. The negotiation between the buyer and the seller involves complexities if there is no operating agreement in the first place. As an owner, you must find a buyer, write the change of ownership letter, set out other formalities, and voila! Your ownership transfer is done. The parties will settle the sale contract, including the LLC price, following Ohio state laws.

How to Transfer Ohio LLC Ownership

When an LLC member decides to step down from the owner’s position, they must transfer the ownership to someone else. It can be other existing members of the LLC or a third party. Transferring LLC ownership in Ohio is a common yet complex deed. LLC owners who want to transfer their ownership must follow some steps to do the task. Here are the following steps-

Step 1: Review Your Ohio LLC Operating Agreement

An operating agreement is a kind of non-mandatory document in many states. In Ohio, it is not mandatory to draft one. If you have one at the time of LLC formation in Ohio, then it would be easier for the owners to transfer the name. If not, then it should be filed at the time of transferring ownership. The operating agreement for the LLC in Ohio must be reviewed for the ownership transfer conditions and other legal requirements regarding the buy-out and sale of the LLC.

Step 2: Amend the Ohio Articles of Organization

Changing/transferring ownership might lead to structural change at the managerial level. In that case, the LLCs must comply with the Ohio Secretary of State. To do so, one must file the Ohio Articles of Organization amendment. Specifically in Texas, LLCs must submit a Public Information Report annually to the Texas Comptroller of Public Accounts. The managerial changes will be explained there.

As soon as the ownership transfer negotiation is done and the agreement is made with the updated change of ownership, file it with the Secretary of State. For that, you must amend the Articles of Organization and get the Articles of Amendment. Make the changes to the existing Articles of Organization, get the amendment form, and submit it to the Ohio SOS along with other documents and the filing fee. Read how to amend Ohio Articles of Organization in a simple way.

Step 3: Spread the News

Once the legal formalities are done, and the ownership of your LLC is transferred officially in Ohio, you must spread the word to the clients, partners, and other concerned people. Also, banks and other financial institutions should be notified about the ownership change. Business entities, vendors, and other officials you work with should also be notified. 

Step 4: Obtain a New EIN (optional)

You might need to apply for a new EIN based on the LLC ownership transfer. After officially transferring ownership, you must check with the IRS whether you need a new EIN. There is a formal form to notify the IRS about the LLC ownership transfer. Get the form from their website, enter the details, and submit it. You will get notified whether you need to apply for a new EIN. 

Why Transfer LLC Ownership in Ohio

There can be several reasons why the transfer of LLC ownership in Ohio takes place in any organization. Some of the most common reasons include the following-

  1. Death of the LLC owner
  2. Separation or Divorce of the LLC Owners
  3. LLC owners do not wish to continue their association with the organization
  4. LLC owners want to appoint a new member (owner)
  5. LLC owners want to sell the business off to someone else

These are some of the common reasons why an LLC ownership gets transferred in Ohio. Transferring LLC ownership requires a comprehensive LLC operating agreement in Ohio. This is an internal document every LLC should have at the time of formation. 

The Role of Ohio Operating Agreement in LLC Ownership Transfer

Creating an Operating Agreement in Ohio is one of the major steps in forming a limited liability company (LLC). However, many states do not require an Operating Agreement. California, New York, Delaware, Maine, Nebraska, and Missouri are the states where an LLC operating agreement is mandatory. 

Even when your state does not necessarily need you to file the operating agreement, it is recommended that you should have it to avoid any internal disagreements or issues in the future.

LLCBuddy Editorial Team

An operating agreement is an internal document explaining all the procedures, including ownership transfer, dissolution, LLC operation, members, and other LLC-related processes. Operations, such as dissolution and ownership transfer, occur based on those written regulations. 

If there is no Ohio Operating Agreement or it does not have clear ownership transfer or buy-sell agreement provisions, the transfer takes place based on Ohio state law. 

What to Include in Ohio Operating Agreement

This official document outlines the company’s structure, the members’ details, the dissolution process, and a lot more. Hence, it is always wise to have one to avoid any confusion in the future, whether your state needs it or not. The LLC operating agreement should have the following points-

  • Whether LLC members are related to each other and what type of relationships they share
  • Managers’ rights and responsibilities
  • Operating Agreement Amendment conditions
  • Members’ profit and loss shares
  • Ohio LLC Tax structures
  • Transfer of ownership rules and procedure
  • Dissolution of Ohio LLC

If your operating agreement explains all the above points, you must follow it for the ownership transfer. 

Reasons to Transfer Ohio LLC Ownership

There can be many issues that lead to ownership transfer. One of the most common issues is the death of the owner. There can be other issues where transfer of ownership occurs. Here are some issues to consider, 

Divorce Or End of Marriage:  In some cases, according to the divorce decree, the ownership transfers to the spouse. If the LLC in Ohio has an operating agreement and the ownership transfer condition is specified, then the LLC must follow the Ohio operating agreement to proceed. 

Death of a Member: This is the most common issue in LLCs. In Ohio, if a member dies, the ownership, by default, transfers to the legal heirs of the deceased person. However, in this case, the legal heirs (wife/husband/kids) do not get any managerial power or authority. They continue enjoying the benefits, such as a share of the profit and others. But they won’t get any other power in the company. In such situations, other members of the Ohio LLC often buy out the deceased’s interests. 

Dissolution of Ohio LLC: If any member/owner plans to leave the company, the LLC gets dissolved and reformed with the new policy and operating agreement. The members and managers make this sort of decision at the time of the creation of the operating agreement. 

FAQs

How do I transfer Ohio LLC ownership?
Ohio LLC ownership can be transferred by following the procedures outlined in the LLC operating agreement or by obtaining written consent from all members.
Can a transfer of Ohio LLC ownership be done without the consent of all members?
In Ohio, a transfer of LLC ownership typically requires the consent of all members unless the operating agreement states otherwise.
What is the process for transferring ownership of an Ohio LLC?
The process for transferring ownership of an Ohio LLC involves drafting a purchase and sale agreement, updating the articles of organization with the Secretary of State, and notifying all members of the change in ownership.
How long does it take to transfer ownership of an Ohio LLC?
The timeline for transferring ownership of an Ohio LLC can vary depending on the complexity of the transfer and the efficiency of the involved parties. Generally, it can take a few weeks to complete the transfer process.
Does transferring Ohio LLC ownership have tax implications?
Transferring Ohio LLC ownership may have tax implications for both the buyer and the seller. It is advisable to consult with a tax professional to understand the potential tax consequences before completing the transfer.
Can a transfer of Ohio LLC ownership impact the LLC’s existing contracts or agreements?
Yes, transferring ownership of an Ohio LLC can potentially impact the LLC’s existing contracts or agreements. It is important to review all contracts and agreements before completing the transfer to ensure compliance and continuity.
What are the steps to change the ownership interest in an Ohio LLC?
The steps to change the ownership interest in an Ohio LLC typically involve obtaining written consent from all members, updating the LLC operating agreement, and filing necessary paperwork with the Secretary of State.
Are there any specific requirements for transferring ownership of an Ohio LLC?
In Ohio, the specific requirements for transferring ownership of an LLC may vary depending on the terms of the operating agreement and state regulations. It is recommended to review the operating agreement and consult with legal counsel for guidance.
Can ownership of an Ohio LLC be transferred to a non-member?
In Ohio, ownership of an LLC can generally be transferred to a non-member with the consent of all existing members. However, the transfer process may involve additional steps and considerations.
How can I document the transfer of ownership of my Ohio LLC?
The transfer of ownership of an Ohio LLC can be documented through a purchase and sale agreement, an updated operating agreement, and any necessary filings with the Secretary of State. It is important to keep detailed records of the transfer for compliance purposes.
What happens if a member of an Ohio LLC wants to transfer their ownership interest?
If a member of an Ohio LLC wants to transfer their ownership interest, they will need to follow the procedures outlined in the operating agreement, obtain consent from all other members, and update the necessary documentation with the Secretary of State.
Can I transfer ownership of my Ohio LLC without notifying the Secretary of State?
In Ohio, transferring ownership of an LLC typically requires updating the necessary paperwork with the Secretary of State to reflect the change in ownership. Failure to do so may result in legal and compliance issues.
Are there any transfer fees associated with changing ownership of an Ohio LLC?
In Ohio, there may be filing fees associated with updating the LLC’s paperwork with the Secretary of State to reflect the change in ownership. It is advisable to check with the Secretary of State’s office for the most up-to-date fee information.
Can the transfer of Ohio LLC ownership affect the LLC’s standing with the state?
Transferring ownership of an Ohio LLC should not affect the LLC’s standing with the state as long as all necessary paperwork is filed and compliance requirements are met. It is important to update all relevant documentation to ensure continued compliance.
Is there a deadline for transferring ownership of an Ohio LLC?
While there is no specific deadline for transferring ownership of an Ohio LLC, it is recommended to complete the transfer in a timely manner to avoid any potential legal or compliance issues. It is best to begin the transfer process as soon as possible after reaching an agreement.
What documentation is required to transfer ownership of an Ohio LLC?
To transfer ownership of an Ohio LLC, documentation such as a purchase and sale agreement, an updated operating agreement, and any necessary filings with the Secretary of State may be required. It is important to consult with legal counsel to ensure all required documentation is in order.
Are there any restrictions on who can transfer ownership of an Ohio LLC?
In Ohio, restrictions on transferring ownership of an LLC may be outlined in the operating agreement or state regulations. It is important to review the operating agreement and consult with legal counsel to understand any restrictions that may apply.
Can ownership of an Ohio LLC be transferred through a simple verbal agreement?
While ownership of an Ohio LLC can theoretically be transferred through a verbal agreement, it is advisable to document the transfer in writing to avoid any potential misunderstandings or disputes. A written purchase and sale agreement is recommended for clarity and compliance.
Can ownership of an Ohio LLC be transferred to a trust or estate?
In Ohio, ownership of an LLC can typically be transferred to a trust or estate with the consent of all existing members. The transfer process may involve additional steps and documentation to ensure compliance with state regulations.
What are the consequences of not following the proper procedure for transferring Ohio LLC ownership?
Failing to follow the proper procedure for transferring Ohio LLC ownership could result in legal and compliance issues, disputes among members, and potential financial liabilities. It is important to follow the required steps and guidelines for a smooth and compliant transfer.
Can ownership of an Ohio LLC be transferred to a corporation?
Ownership of an Ohio LLC can be transferred to a corporation with the consent of all existing members. The transfer process may involve additional documentation and compliance requirements to reflect the change in ownership.
Can ownership of an Ohio LLC be transferred to a minor?
Transferring ownership of an Ohio LLC to a minor may pose legal and practical challenges depending on state laws and the individual circumstances. It is advisable to consult with legal counsel to understand the implications and requirements of transferring ownership to a minor.
Do all members of an Ohio LLC need to agree on the transfer of ownership?
In Ohio, all members of an LLC typically need to agree on the transfer of ownership unless the operating agreement states otherwise. Obtaining written consent from all members is generally recommended to ensure a smooth and compliant transfer.
Can ownership of an Ohio LLC be transferred to a foreign entity?
Ownership of an Ohio LLC can typically be transferred to a foreign entity with the consent of all existing members. The transfer process may involve additional steps and compliance requirements to reflect the change in ownership to a foreign entity.
Can ownership of an Ohio LLC be transferred to a nonprofit organization?
Ownership of an Ohio LLC can be transferred to a nonprofit organization with the consent of all existing members. The transfer process may involve additional documentation and compliance requirements to reflect the change in ownership to a nonprofit organization.
What is the best way to ensure a smooth transfer of ownership for an Ohio LLC?
The best way to ensure a smooth transfer of ownership for an Ohio LLC is to carefully review the operating agreement, obtain written consent from all members, document the transfer in writing, and update all necessary paperwork with the Secretary of State. Consulting with legal counsel and financial advisors can also help facilitate a successful transfer.
Can ownership of an Ohio LLC be transferred to a family member?
Ownership of an Ohio LLC can typically be transferred to a family member with the consent of all other members. The transfer process may involve additional steps and documentation to reflect the change in ownership among family members.
Are there any specific regulations related to transferring ownership of an Ohio LLC?
While the regulations related to transferring ownership of an Ohio LLC may vary depending on the operating agreement and state laws, there are generally no specific regulations that prohibit the transfer of ownership as long as all compliance requirements are met. It is advisable to review the operating agreement and consult with legal counsel for guidance on any specific regulations that may apply.
Can ownership of an Ohio LLC be transferred to a business partner?
Ownership of an Ohio LLC can be transferred to a business partner with the consent of all existing members. The transfer process may involve additional documentation and compliance requirements to reflect the change in ownership to a business partner.
How do I transfer ownership of my Ohio LLC?
You can transfer ownership of an Ohio LLC by selling or gifting your membership interest to another person or entity.

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In Conclusion

As you all know, forming a limited liability company is much easier than forming a corporation, a partnership, or any other type of business. The ease of transferring ownership from one to another is one of the many reasons for entrepreneurs to start an LLC. In Ohio, transferring LLC ownership does not need a lot of paperwork or steps. You must update the formation papers with the new ownership information, file the amendment to the formation document, tell people about it, and comply with the state.

Though it seems easy to file documents while transferring ownership, it could be more complex than just these steps. Based on the local regulations, nature of business, or some other administrative rules, transferring ownership in Ohio might take more than what it looks like. It is recommended to consult a professional or attorney before you take such an important business decision.

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