What is a Multi-Member LLC (MMLLC)?

A Multi-Member LLC is abbreviated MMLLC and is the term used for an LLC that has 2 or more Members (owners). There are no limits* to the number of Members a Multi-Member LLC can have and the LLC Members can be individual people, or they can be companies (like another Corporation or LLC).

The purpose of starting a Multi-Member LLC is protect the personal assets of the Members. LLCs – Limited Liability Companies – do just that; they limit the amount of liability the owners would be exposed to in the event of a lawsuit.

The most popular forms of Multi-Member LLC are husband and wife LLCs and friend’s/business partner LLCs. Multi-Member LLCs are allowed in all 50 states.

Multi-Member LLCs can be formed by both US citizens, as well as non-US citizens and non-US residents*. The same goes for Single-Member LLCs.

*If a Multi-Member LLC elects to be taxed as an S-Corp with the IRS, the number of owners (called “shareholders”) cannot be more than 100. Additionally, S-Corp shareholders (LLC Members) cannot be non-resident aliens.

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Taxes & Multi-Member LLCs

For federal tax purposes, the IRS taxes a Multi-Member LLC like a Partnership.

For this type of taxation, the Multi-Member LLC will file Form 1065 (“Partnership Return”) with the IRS. This is an informational return. Also, whoever prepares the taxes for the Multi-Member LLC will also issue K-1s to the LLC Members. The K-1 then become a part of each Member’s personal 1040 personal income return. The K-1 reports the income (or loss) that each Member made (or lost) from the LLC.

Please note that we said “taxes a Multi-Member LLC like a Partnership“. This terminology regarding LLCs and taxation can get a little bit confusing as sometimes people think that their LLC is a Partnership.

Legally, your LLC is not a Partnership (it’s just treated this way for tax purposes). You LLC is a legal business entity – (separate from yourself) that is created by state law. The IRS does not have a specific tax classification for LLCs, so instead, the IRS taxes the Multi-Member LLC just like a Partnership (since there are multiple owners).

If instead, you’d like your Multi-Member LLC to be taxed as an S-Corp, you can complete Form 2553 and submit this to the IRS. Alternatively, you can also have your LLC taxed as a C-Corp by completing Form 8832 and submitting it to the IRS. Either way, we strongly recommend that you speak with a few accountants to get a few different perspective on which form of taxation is best for your LLC and your situation. We see far too many people file forms with the IRS without understanding the full ramification, and pros and cons for their business.

How to pay yourself in a Multi-Member LLC?

In a Multi-Member LLC, in order to pay the members, you will simply take what are called “capital distributions”. This is a withdrawal made from the LLC Bank account to each individual Member in proportion to their membership interest (how much they own).

After forming your LLC and opening your LLC’s bank account, each Member will make a “capital contribution” to the LLC, also in proportion to their membership interest.

If your LLC will be taxed as an S-Corp by the IRS, then each Member will need to take a reasonable salary, pay payroll taxes on such salary, and the LLC will need to file a corporate tax return, called 1120S, with the IRS each year.

Can I get an EIN for a Multi-Member LLC?

Yes, of course. A Multi-Member LLC can obtain a Federal Tax ID Number, also known as an EIN (Employer Identification Number) from the IRS after the LLC is approved by the state.

An EIN will be used for opening your business bank account, filing taxes, handling employee payroll (if applicable), and obtaining certain business licenses and permits.

An EIN for your LLC is free and can be obtained from the IRS online in about 10 to 15 minutes.

How to Form a Multi-Member LLC?

In order to form a Multi-Member LLC you must file what are called the “Articles of Organization” (or a similar document, such as a “Certificate of Formation” or “Certificate of Organization”, depending on the state) with the Secretary of State’s Office.

You must file your LLC’s Articles of Organization (or similar forms) with the Secretary of State located in the same state in which you wish to conduct business. For example, if you’re forming an LLC in New Mexico, you must file your LLC’s Articles of Organization with the New Mexico Secretary of State.

You can file your Multi-Member LLC yourself by following our free DIY LLC Guides, which are available in all 50 states. Or if you’d like to get a better understanding on LLCs first, please see the videos and articles located in our LLC Learning Center.

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Matt Horwitz
Founder & Educator at LLC University
Forming an LLC shouldn't be so complicated. Our step-by-step guide will make the process a breeze – and no complex legal jargon! We teach people how to form an LLC for free in all 50 states. We hope you find our free guides and resources helpful in your entrepreneurial journey.
Leave a Comment (35) ↓

35 Comments

  1. is June 19, 2017

    is it better to make a multi member llc or change of ownership ?
    do i need a new ein or i could use the current? thank for all the info.
    please previde links thanks

    reply
    • Matt Horwitz June 20, 2017

      You can either form a new multi-member LLC or amend your existing LLC, amend the Operating Agreement, sign a resolution, and mail a letter to the IRS about the tax classification change. If you’re doing this yourself, it’ll be a little easier to form a new LLC.

      reply
  2. Modia Ra October 9, 2017

    This is an excellent article. Thank you for posting!

    reply
    • Matt Horwitz October 10, 2017

      You’re welcome Modia!

      reply
      • Mike Smith January 19, 2018

        If six people form an LLC are they actually shareholders? Lets say we make 100k in profit. Two of the six want out of the LLC are they owed anything? How does it work in terms of company worth and or return on investment?

        reply
        • Matt Horwitz January 19, 2018

          Hi Mike, no the 6 people would not be referred to as shareholders. That terminology is used for Corporations. They would be considered LLC Members. LLC Members are the same thing as LLC owners. With this many members, you’ll want a customized Operating Agreement drafted by a lawyer, this way, if 2 of the 6 members leave, there is an already agreed upon arrangement in place. Typically there is a price involved which is used as legal consideration so the exiting members can transfer their LLC interest to the remaining members. In terms of company worth and return on investment, I’m not sure what you’re asking. Feel free to rephrase that part of your question.

          reply
  3. Amelia December 18, 2017

    Hi Matt,
    I’m part of a 2 member LLC but I will be leaving the LLC to take care of my family, leaving it to become a single member LLC. Do you know if the remaining member will need to get a new EIN in this situation or can he keep the EIN and just let the IRS know it’s now a single member LLC? I’m reading conflicting information online and from the IRS about this. Thanks in advance!

    reply
    • Matt Horwitz December 22, 2017

      Hi Amelia, do you know who is listed as the Responsible Party? You can find this on your EIN Confirmation Letter. You’ll want to write a letter to the IRS letting them know that the number of members in your LLC has changed from 2 to 1 and your LLC Partnership has terminated, but the LLC will continue to operate as a single-member LLC taxed as a Sole Proprietorship. In the eyes of the IRS, it’s like your Partnership closed and now a Sole Proprietorship opened.

      reply
      • Amelia February 1, 2018

        Hi Matt,

        Sorry for the delayed response – just saw your reply. Thank you for your response.

        I am the Responsible Party listed with the IRS. We’ll issue a letter to the IRS to notify them of the changed and also change the responsible party. One issue is that the other LLC member is a foreigner and doesn’t have a SSN or ITIN. Will he need at least an ITIN to take over the LLC once the partnership is dissolved?

        And just to clarify, he could keep the current EIN as a single member LLC taxed as a sole proprietorship?

        Thank you for help!

        reply
        • Matt Horwitz February 3, 2018

          Hi Amelia, in this case, it’s best to cancel the EIN since it’s connected to you. Your partner can obtain a new EIN (without needing an SSN or ITIN) by submitting Form SS-4 by mail or by fax (he won’t be able to do online). On line 7b where it asks for “SSN, ITIN, EIN”, just write “Foreign”. Hope that helps.

          reply
  4. Mike Smith January 19, 2018

    We have a group of six individuals that will be paying monthly dues to an account. These six people will also have a business that is for profit. Would a multi member LLC be for the entire group including monthly dues or would it be only the for profit aspect?

    reply
    • Matt Horwitz January 19, 2018

      Hi Mike, when you say monthly due, what type of monthly dues are you talking about? A monthly number that you came up with? If so, what’s it paying for? And I don’t understand your last question about a MMLLC being for the whole group. Can you please rephrase?

      reply
  5. Emily February 15, 2018

    Hi Matt, your resources are very helpful – thank you! I’m looking to form an LLC with one other person as an equal partnership, but I don’t see any place on the NYC LLC online form to enter multiple members’ names and addresses – only the person filling it out. Should there be a way to enter both of our names & addresses as owners/members when we file for the LLC, or is it ok if only one person’s name is on it and we then use the Operating Agreement to list out the members and percentages?

    reply
    • Matt Horwitz February 21, 2018

      Hi Emily, you’re very welcome! Thanks for the nice comment :) New York (along with most states) actually doesn’t want to (or need to) know who the LLC Members are, since this is an “internal affair”. The person listed at the bottom of the Articles of Organization is simply the LLC Organizer, the person completing and submitting the form. So the person on the form (although it’s probably you) isn’t technically an LLC Member until you sign the LLC Operating Agreement. Having said that, you can also have the LLC Organizer sign a Statement of LLC Organizer, which appoints the LLC Members. The Statement of LLC Organizer along with the LLC Operating Agreement create a very nice and organized paper trail. Hope that helps!

      reply
  6. Ashe February 28, 2018

    It took me a lot of sifting through websites to finally come across yours.

    Multiple articles I found searching for different subjects within LLC creation have been the best.

    Your site is helpful, and you have already won me over as trustworthy in my eyes after tediously looking for answers to these questions.

    If there is some way I can recommend your website or help your SEO so you appear more predominantly in the search results please let me know how. Otherwise thank you very much for your concept of llc university. There is not much definitive information on the topic and I salute you for focusing on bringing this content to entrepreneurs.

    Thank you.

    Ashe

    reply
    • Matt Horwitz February 28, 2018

      Hey Ashe, I’m not sure if this is a pitch/promotional comment to offer your services (if it is, it’s the smoothest I’ve ever seen ;)… or it’s just a genuine comment. Either way, I hope our site has been helpful. We’re not worried about SEO. We’re focused on being the most helpful and providing the best information. The “SEO” will take care of itself. As time goes on, less people will have to do the sifting you did to find us. So thanks for your “digging” to land here :)

      reply
      • Ashe February 28, 2018

        Lol,

        Nope, just a big thank you!

        I will continue to recommend your service to any followers.

        We are doing FBA and I’m sure many more will be to follow.

        You may like to write an article specific to FBA and others looking specifically to get into online business who do not understand if they should file in their own state or another.

        I found after my own research, the most direct method for starters is filing in your own state so that you can be your own agent and saves you the step of finding someone else to act as your agent in another state. I found multiple accounts of people saying that most people starting an LLC for online business won’t be doing enough in sales for it to make the difference and that later once business picks up you can decide how, when and if you want to incorporate.

        The next thing I’ll be researching is how we should be filing as a multi member llc and if s-corp or c-corp is right for us.

        Good luck with your endeavors!

        Ashe

        reply
        • Matt Horwitz March 2, 2018

          You’re super awesome Ashe! Thank you!! We have FBA on our list… just a handful of things in front of it ;) We’ll soon provide more specific articles for people in FBA as well as other forms of eCommerce. And great points on the best “starter pack” for most people. We couldn’t agree more! Which state are you filing in? In most states, whether Single-member or Multi-member, the Articles of Organization (or similar document) is still the same. Regarding S-Corp taxation (which may make sense after net income is above a certain level), please see: LLC taxed as S-Corporation.

          reply
  7. sonia March 6, 2018

    I have formed a multi member llc. There are 4 household members, 2 households are husband and wife and the other two are individuals. For obtaining EIN on IRS.gov, there is a question that asks how many members are in LLC. Will it be 4 members (4 households) or 6 members.

    reply
    • Matt Horwitz March 10, 2018

      Hi Sonia, I’m not really sure what you mean by “households” in this context. However many individual people are members of the LLC is what should be listed in the EIN application though. Hope that helps.

      reply
  8. Kevin April 10, 2018

    Thanks for the guidance and concise info Matt. Two questions:
    1) Is there any additional liability benefit to forming a new multi-member LLC with a single member LLC as one of the members, rather than an individual? I have existing LLC that I use for other services and am forming a new company with other partners.
    2) Can multi-member llc’s be amended in future to include additional members and change % of ownership? I saw your comment about shares and equity and want to know if there is a way to use LLC rather than forming a corporation.

    Thanks for the info!

    reply
    • Matt Horwitz April 11, 2018

      Hey Kevin, you’re very welcome. 1) There may be additional liability protection by the LLC member being another LLC, however, this is not something we’ve researched or covered yet, so cannot provide any details. We recommend speaking a business lawyer regarding that. 2) Yes, the LLC Members can be changed and the percentages of ownership can change as well, via an amended Operating Agreement and supporting documentation, such as resolutions and agreements. We also advise getting assistance from a lawyer on this as well as this is not something we recommend DIY’ing. Apologies for the lack of specificity. And thanks for your understanding.

      reply
  9. SHEVAN WILKS April 10, 2018

    why am I not seeing my EIN for my LLC on sunbiz.org?

    reply
    • Matt Horwitz April 11, 2018

      Hey Shevan, I imagine you’re thinking that after you form your LLC in Florida and then get an EIN from the IRS, that it will then show up on Sunbiz, correct? If so, that’s not how it works. The IRS does not contact the Florida Department of State and provide them with your EIN. You can give the state your EIN when you file your Annual Report. And then it’ll show up on your LLC’s record. Also keep in mind that you’re not required to disclose your EIN to the Florida Department of State, however, something does need to be entered into the field. Filers who’d rather not disclose the EIN on state records enter “Applied for” or “None”. Hope that helps.

      reply
  10. Stanley April 12, 2018

    A 2 member Delaware LLC, with both members being non-us citizens and non-us residents, generates income from outside the US. How will the LLC and the 2 members be taxed?

    reply
    • Matt Horwitz April 14, 2018

      Hey Stanley, the LLC will be taxed as a Partnership for US tax purposes. The details of how and where to file should be discussed with an accountant who specializes in US taxes for foreigners. Hope that helps.

      reply
  11. Sam A. April 26, 2018

    Hi Matt, I came stumbled across your web site and I’m eating it up! :) Absolutely love it and thank you soooo much for this invaluable information, all in one place.

    reply
    • Matt Horwitz April 29, 2018

      Dude, thanks for the rockin’ comment! So glad to hear you’re enjoying the site. It’s taken a long time and a lot of work, so it’s always great to know that we’re helping. Thanks again :)

      reply
  12. Katty Fernandez June 2, 2018

    Hi,
    I’m planning to do a LLC with a foreign individual (NO ITIN/SSN).
    What is the best option to be treated as S-Corp. Can we do?
    – 2 LLCs. 1er member-LLC (US citizen) and 2nd memeber-LLC(foreign) (LLC)…or

    -1er member as individual (US citizen) and 2nd member as LLC (foreign individual)

    Do you think that is posible?
    Thanks for your help

    reply
  13. CJ June 5, 2018

    So, for the past 2 yrs I have owned a business in Florida which I now plan to bring someone else on board. I currently have an LLC for a skincare related business, and now am going mobile and need to add an additional member, who I chose as my business partner, into the LLC. Trouble is, I don’t know how to update my current LLC to add this person, and I also am not comfortable making this person 50% in this business seeing I am the one who created it, has been working it, and who is way more knowledgeable about it. This is a business that I started in NY 4yrs ago and brought to Florida, and have been operating under its name for almost 2yrs. I have no problem bringing this person on board but I refuse to let this business plan and idea somehow slip out of my hands in case this person and I were to ever have a falling out. How do I change my current LLC to a MMLLC with also doing the percentage thing as to not make someone get hard feelings about the situation? For some reason, no one seems to understand what I’m asking, and maybe that’s because I have no idea how this stuff works lol! Any help with this would be greatly appreciated!
    Thank you!!

    reply
    • Matt Horwitz June 17, 2018

      Hi CJ, I’d say more importantly, you sound very hesitant about taking on a business partner. It’s a whole different ball game than running things yourself and you’re right, things could go sour. However, if things go sour in a 2-Member LLC, you just can’t kick that person out. You’re stuck with them until you make an agreement. I’d also recommend consider other options of working together, like just paying them as an independent contractor based on a percentage of sales, etc. If you do want to add them as an LLC Member and retain control, you’ll want to have your LLC be Manager-Managed. You’d be the Manager, and both of you would be owners. You’ll then need to amend your Articles of Organization, amend the Operating Agreement, and then update the IRS and let them know the LLC will now be taxed as a Partnership. Hope that helps.

      reply
  14. Tony June 19, 2018

    I am considering moving a few properties to multi member LLC’s, I am trying to understand all the costs. If I have 3-4 members do the costs to file increase? Besides my CPA costs are there Any costs that I should be made aware of?

    reply
    • Matt Horwitz June 19, 2018

      Hi Tony, LLC filing costs with the state are the same regardless of the number of LLC Members. You’ll also want to look into title/closing costs. Hope that helps.

      reply
  15. Ray Mo June 20, 2018

    Hi Matt,

    Great info for many of us!
    What are the reporting requirements for a Foreign Owned Entity who is a member in a multi-member US LLC?
    Will it be only for the entity K-1 income only or is there additional
    reporting for the individual owners of the foreign owned entity?
    Thanks!

    reply

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