How to Transfer LLC Ownership: Consent, Paperwork, and the IRS

What happens if the operating agreement says nothing?

State LLC law then applies, and each state writes its own rules. The table below compares Delaware law and the Revised Code of Washington (RCW). Both states separate the money rights from member status. The statutes say “limited liability company agreement,” and Delaware’s definition covers an “operating agreement” that is “written, oral or implied.”

Check your own state’s LLC law, because the rule and its wording can differ.

Order matters for a seller in Delaware. Unless the agreement says otherwise, a member who assigns all of their interest “ceases to be a member.” A seller can lose member status before the buyer has it, so get the members’ consent before or at the same time as the assignment.

Seven steps to transfer LLC ownership

Follow these steps in order. Your operating agreement or your state’s law may add others.

1. 1Read the operating agreement. Look for rules on transfers, consent, buyout rights, and how a new member is admitted.
2. 2Get the consent you need. Have the required members sign a written consent. Under the Delaware and Washington default rules, that means all members.
3. 3Sign an assignment of membership interest. Name the person transferring the stake, the person receiving it, the percentage, the price if there is one, and the transfer date.
4. 4Update the operating agreement and the LLC’s records. Show the new member, the new percentages, and who manages the LLC.
5. 5Update the state record if it lists members or managers. Some state filings name these people and some do not.
6. 6Tell the IRS if the responsible party changed. Form 8822-B reports that change, and the form gives a 60-day deadline.
7. 7Update the bank, licenses, and tax accounts. Each one can have its own rules for an ownership change.

The assignment in step 3 is a private document. Delaware section 18-702 and Washington RCW 25.15.251 do not name a government form for the transfer. An attorney can draft the assignment so that it matches your operating agreement.

Step 4 needs exact numbers. Write down each member’s share of ownership, profits, and voting. In an LLC taxed as a partnership, those numbers can differ. Our guide on splitting LLC profits differently than ownership explains the IRS test.

Step 5 depends on your state. Three examples show the range:

• California. Form LLC-12 asks for the “name and complete business or residential address” of any manager, or of each member if no manager was elected or appointed. The Secretary of State says “any time there are information changes in between statutory filing periods, an updated statement should be filed.”
• Washington. The annual report must state “The names of the entity’s governors.” For an LLC, a governor is a manager of a manager-managed LLC or a member of a member-managed LLC. The law also allows a report “at such additional times as the entity elects.”
• Delaware. The statute says a certificate of formation must state the LLC’s name and its registered office and agent, plus “Any other matters the members determine to include therein.” Member names are not on that required list.

If the former owner also served as the LLC’s registered agent and will no longer serve, the LLC needs a new agent on the state record too.

How to transfer a single-member LLC or transfer to another LLC

A single-member LLC has one owner, so there are no other members to ask. Delaware and Washington each have a separate rule for this case. In Delaware, a single assignee becomes a member on “the voluntary assignment by the sole member” of all the LLC’s interests. The agreement can provide otherwise by a specific reference to this rule, and the assignment can also provide otherwise. In Washington, the new owner is admitted “upon the effectiveness of the transfer.”

Use the same paperwork anyway. The owner signs an assignment of the whole interest, and the new owner adopts an updated operating agreement. Steps 4 to 7 above then apply. A sale of only part of the LLC is a different case, because the LLC then has two owners. The tax section below covers that change.

An LLC can also be the new owner. Delaware and Washington both define a “Person” to include a limited liability company, and both define a member as a person admitted to the LLC. The steps stay the same. The assignment names the buying LLC as the new owner, and someone with authority signs for it.

Two IRS rules matter here. First, the IRS says “Your responsible party must be a person, not an entity,” and the only exception is for government entities. So Form 8822-B still needs a person’s name. Second, the IRS says a single-member LLC owned by a corporation or partnership “should be reflected on its owner’s federal tax return as a division of the corporation or partnership.” The buying LLC’s own tax status can change that result, so ask a certified public accountant (CPA).

How do you change LLC ownership with the IRS?

The IRS form for this change focuses on the responsible party. Form 8822-B has a line for the “New responsible party’s name” and a line for that person’s taxpayer ID number. The form has no line for a list of owners.

The IRS says a responsible party is “someone who owns, controls or exercises effective control over a business, nonprofit or other legal entity and directly or indirectly manages its funds and assets.” So a transfer changes the responsible party only if the person who fills that role changes. A new minority member with no control may not change this line at all.

If the responsible party did change, the form says any entity with an employer identification number (EIN) must report it “within 60 days of the change.” For that change, the form says “use of this form is mandatory.” The form also says you “will not be subject to penalties for failure to file this form.” But the form warns that if you do not give the IRS your current mailing address or responsible party, “you may not receive a notice of deficiency or a notice of demand for tax.” Our Form 8822-B guide walks through the form line by line.

A transfer can mean a new EIN, but not always. The IRS page on new EINs starts with a general rule: “You need a new EIN, in general, when you change your entity’s ownership or structure.” It then lists cases by entity type. It says a partnership does not need one after “a change in ownership that does not result in the termination of the partnership.” For an LLC, it says to get a new EIN if you “Terminate an existing LLC and form a new corporation or partnership.” The LLC list does not name a sale of a whole LLC, so ask a CPA about your case.

Check the number on a single-member LLC’s tax forms too. The IRS treats a single-member LLC as a “disregarded entity” unless it elects to be treated as a corporation. The IRS says such an LLC “generally must use the owner’s” Social Security number or EIN for income tax reporting. So a new owner can change which number goes on those forms.

What are the tax effects of transferring LLC ownership?

The tax result depends on how the LLC is taxed and how the transfer is made. The IRS says a domestic LLC with at least two members is classified as a partnership unless it elects to be treated as a corporation. A single-member LLC that does not make that election is a “disregarded entity.” The cases below use IRS wording, and a CPA should check your result before anyone signs. These cases assume the LLC has not elected to be taxed as a corporation. If it has, ask a CPA which rules apply.

• Selling an interest in an LLC taxed as a partnership. IRS Publication 541 says “The sale or exchange of a partner’s interest in a partnership usually results in capital gain or loss.” The part tied to the partnership’s “unrealized receivables or inventory items” results in ordinary income or loss.
• A second owner joins a disregarded LLC. Revenue Ruling 99-5 says the LLC becomes a partnership in both of its examples. How the new person comes in changes the tax result, and the ruling assumes simple facts, such as no debt. Our guide to adding a member to an LLC walks through both examples.
• A sale of a whole single-member LLC. The IRS says a disregarded LLC’s activities go on its owner’s federal tax return. The IRS page on selling a business says “The sale of a business usually is not a sale of one asset. Instead, all the assets of the business are sold.” Ask a CPA how that page applies to your LLC.
• A transfer for no payment, such as to a child. The IRS defines a gift as “Any transfer to an individual, either directly or indirectly, where full consideration (measured in money or money’s worth) is not received in return.” The IRS lists an annual exclusion of $19,000 per recipient for 2026, and it lists “Gifts to your spouse” among gifts that are generally not taxable. Ask a CPA how to value the stake and whether you need Form 709, the gift tax return.
• A foreign seller. Publication 541 says the buyer of a partnership interest “may have to withhold tax on the amount realized by a foreign partner on the sale for that partnership interest if the partnership is engaged in a trade or business in the United States.”

Bank, license, and address updates after a transfer

Your bank has its own records of who owns the LLC and who can sign on the account. Ask your bank what it needs after a transfer. If the former owner should no longer have access, ask the bank to remove that person from the account.

Licenses and tax accounts can have their own rules. In California, the seller’s permit FAQ from the Department of Tax and Fee Administration lists “Change the ownership of your business” among the changes a permit holder must report. Contact each agency that issued a license or permit to the LLC and ask what it needs. Also read the LLC’s loans, leases, and main contracts, because some can require consent when ownership changes.

A transfer can also leave old addresses on file. If the LLC used the former owner’s home, that address may still be on state, IRS, bank, and license records. Update each record through its own form or process. Read each form’s address label in full before you fill it in, because the rules differ from form to form.