Q: Transferring ownership of single member LLC from father to son in Ohio, what needs to be done for this to happen?
Family business been around since 1998, became a single member LLC in Ohio in 2013 (though a disregarded entity/sole proprietorship to the federal government). We're looking to transfer ownership from fathers name to sons. Outside of getting account (banking, insurance, etc) setup in new ownership...along with a possible new EIN/etc. What exactly do we need to do from a business perspective? Everything from top to bottom of the business will be transferred over (physical assets, money, etc). I've read some various sites mentioning different things, but nothing concrete. Any help would be greatly appreciated.
A: The IRS assigns EINs to the legal entity, not individual member(s). As a single-member LLC, a sales agreement transferring your LLC shares (membership units) to your son should be sufficient. You should ensure as due diligence that the company's contracts with vendors, customers, etc., are all in the name of the LLC — if not, assign them first. Please note there may be federal income and/or gift tax implications if this transfer is for something other than fair market value and does not pass via a will or trust.
Mark Martin Turner agrees with this answer
A: In addition to the previous answer, you should also review all of the LLC's contracts, leases, loans and other agreements to see if you have any personal guarantees that need to be transferred. In addition, make sure you contact your insurance agent. There may be some need for you as the father to carry tail insurance, depending on the type of business you are transferring, as well as making your son an additional insured on policies going forward.
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