Limited liability companies, or LLCs, are formed under state laws, which vary among the 50 states. All now allow a single-member LLC, with an individual or single corporation owner. Changing the form of an LLC requires getting agreements from the existing members and completing a new article of organization and operating agreement. The IRS also must be informed of the change.
Step 1
Obtain signed agreements from all existing members of the LLC outlining the surrender of assets or interests, any compensation to be paid by the single member and any tax responsibilities. Complete an amendment to the existing article of organization or file a substitute one with the Secretary of State or other appropriate agency; this will vary among states and a document may have to be filed in every state where the LLC operates.
Step 2
Draft a new operating agreement specifying how the new LLC will function. Formally transfer all assets, whether financial investments, property or equipment, into the name of the single-member LLC. File the new operating agreement and any transfer documents with the state or other governmental agency; a transfer of property, for instance, may need to be filed with a county assessor or recorder.
Step 3
Notify the IRS of the change in status with a Form 8832, Entity Classification Election, to alter the tax status from a partnership or corporation for a multiple-member LLC to a "disregarded entity" or sole proprietorship for a single-member LLC. Obtain a new employer identification number if the revised LLC will have employees or use the owner's Social Security number for a self-employed status.
Step 4
File the appropriate tax returns to reflect a change in ownership, whether it is a single partner buying out other owners or a new owner taking over the LLC by buying the interest of the existing owners. Follow IRS Ruling 99-6 to clarify the tax consequences of a change from a multiple-member LLC to a single-member LLC.