Seven steps to take:
In the business world, change is inevitable. If members of your multi-member limited liability company (LLC) decide to part ways and sell their business shares to you, leaving you a single-member LLC disregarded entity, there are certain steps you’ll need to take and tax consequences you’ll want to consider to properly handle the transition.
To properly change from a multi-member LLC to a single-member LLC, you’ll need to follow these steps:
- Obtain a sales agreement.
- Determine the sale date.
- Obtain financials through the sale date.
- Have the final Form 1065 prepared.
- If hot assets are present, have the Form 8308 prepared.
- Attach statements.
- Provide the final Schedule K-1.
Once all other members have left the LLC, be sure to file a new tax election stating that you’d like to be taxed individually. You’ll no longer be taxed as a partnership and will instead be taxed similarly to how a sole proprietorship is taxed. I’ll be happy to guide you through this process. Just call.