Who Can Own an LLC?

HandshakeLimited liability companies are very flexible business entities, and this applies to ownership restrictions as well. The owners of an LLC are called members. A single member can own an LLC by him or herself, but a partnership of members, a group of members, or even a group of businesses can own an LLC. Limited liability companies are creatures of state law, which means every jurisdiction in the United States will have slightly different rules. The limitations on ownership, however, are fairly consistant across the country.

Single Member LLCs

An individual may own an LLC by him or herself. Unlike sole proprietorships, single-member LLCs offer liability protection. For this reason, it is often advantageous for a solo practitioner to form a single-member LLC. You do not need to live in the state in which you form your LLC, but you have to select someone who does live in the state to be the LLC’s registered agent. There are no age restrictions on LLC members, though single-member LLCs with an owner under 18 may have difficulties since minors are not legally able to enter into contracts.

Partnership LLCs or Group LLCs

Two or more people may own LLCs together with each individual being a member. Neither your financial investment nor the work you do for the LLC necessarily have to correspond to how much of the LLC you own. In this way, LLCs are unlike corporations. Rather, you may divide ownership in any way you and the members prefer. Ownership interest can change freely as new individuals become members or old members leave without disrupting the LLC’s status.

LLCs Owning Other LLCs

A business entity such as a corporation, LLC, or trust may own an LLC by itself or with other individuals or businesses. The members or owners of the parent companies typically govern the subsidiary LLC, though ownership interests may be divided in any way as with partnership or group LLCs. A business may wish to own a subsidiary LLC in order to divide assets or liabilities. Generally, the assets of the parent company will be shielded from the debts of a subsidiary LLC.

Special LLC Ownership Restrictions

There are few restrictions on LLC ownership, but some states have particular requirements for special types of LLCs. For instance, a few states offer what is called a professional LLC. In a professional LLC, all members must hold a professional license in the LLC’s specific business. Additionally, restrictions of any kind may be imposed on an LLC by the LLC’s own operating agreement. For instance, some closely held companies may have an operating agreement that specifies that only kin may be members.