How to Add a Member to an LLC: Steps, Taxes and Filings

The short answer

A domestic LLC with two or more members is classified by default as a partnership for federal income tax purposes, unless it elects to be taxed as a corporation with Form 8832.
A partnership files Form 1065 and gives each member a Schedule K-1. For calendar-year partnerships the return is due March 15.
If your single-member LLC already has its own EIN, it keeps that EIN after the change. If it does not have one, it must get one.
A change of responsible party must be reported to the IRS on Form 8822-B within 60 days.
LLCs formed in the United States no longer file BOI reports with FinCEN, under the rule in force since August 14, 2026.

Table of contents

What changes when a single-member LLC gets a second member
How to add a member to an LLC, step by step
Two ways a new member joins, two different tax results
Tax consequences of adding a member
If you or the new member are not U.S. residents
Do you need a new EIN?
What about BOI reporting?
Common mistakes
Frequently asked questions

Adding a member to an LLC takes a signature on an updated operating agreement. The consequences go further. When a single-member LLC gets a second owner, the IRS stops treating it as a disregarded entity and starts treating it as a partnership. New returns, new reporting and, for non-resident owners, new withholding rules follow.

This guide covers the process step by step, the tax consequences and the points that matter most if you or the new member live outside the United States.

What changes when a single-member LLC gets a second member

For federal income tax purposes, an LLC with one member is disregarded as separate from its owner. An LLC with at least two members is classified as a partnership, unless it files Form 8832 and elects to be taxed as a corporation.

The change happens by default, the moment the second member joins. Nobody needs to file anything for the classification to change. What you do need to file is everything that comes with the new classification.

In practice:

The LLC files its own partnership return, Form 1065.
Each member receives a Schedule K-1 with their share of income, deductions and credits.
The LLC remains a pass-through entity: it does not pay federal income tax itself. Each member reports their share.

How to add a member to an LLC, step by step

Read your current operating agreement. Check whether it allows new members, what approval it requires and whether it sets rules on transferring ownership.
Decide how the new member comes in. The new member can buy part of your interest, or contribute money or property to the LLC in exchange for a new interest. The tax result is different, as explained below.
Amend the operating agreement. Add the new member’s name, ownership percentage, capital contribution, voting rights, rules for dividing profits and losses, and what happens if a member leaves. Both members sign.
Check your state’s requirements. Rules vary by state and by how the LLC is managed. Some states require an amendment or an updated report when members or managers change. Others do not list members in public records at all. Check with your Secretary of State or your registered agent before assuming nothing is due.
Update the IRS records. Confirm the EIN position (see below). If the responsible party changes, file Form 8822-B within 60 days.
Update your bank and payment providers. Banks usually ask for the updated operating agreement and identification for each new owner.
Plan the first partnership return. The LLC’s first Form 1065 covers the period from the date the second member joined. For calendar-year partnerships it is due March 15 of the following year: see our calendar of IRS filing deadlines.

Two ways a new member joins, two different tax results

The IRS addressed both cases in Revenue Ruling 99-5.

The new member buys part of your interest. You sell, for example, 50% of your ownership directly to the new member, and the money goes to you. The IRS treats this as if you sold a share of each LLC asset. You may have a taxable gain on the part you sold. The partnership then starts with both of you contributing your shares of the assets.

The new member contributes to the LLC. The new member pays money into the LLC in exchange for a new ownership interest, and the LLC keeps the money for the business. The IRS treats this as a contribution to a new partnership. As a general rule, no gain or loss is recognized on the contribution.

The difference affects your tax bill and the tax basis of the LLC’s assets. Decide the structure before the new member pays anything.

Tax consequences of adding a member

For the broader picture of how each entity is taxed, see our guide to U.S. business taxes for non-resident owners.

Partnership by default. Income, losses and credits pass through to the members according to the operating agreement.
Form 1065 and Schedule K-1. The LLC files Form 1065 every year and gives each member a K-1.
Electing corporate tax treatment is possible. A multi-member LLC can file Form 8832 to be taxed as a corporation instead.
S corporation status has limits. An S corporation cannot have nonresident alien shareholders. If any member is a nonresident alien, the S corporation election is not available.

If you or the new member are not U.S. residents

A single-member LLC wholly owned by a foreign person has a specific obligation: Form 5472 with a pro forma Form 1120, reporting transactions between the LLC and its owner. That rule applies to a disregarded entity wholly owned by a foreign person. Once the LLC becomes a partnership, it no longer falls under that definition. The year of the change still needs attention, because the LLC may have obligations for the period before the second member joined. Our guide on Form 5472 for inactive LLCs explains which transactions count.

A partnership with income effectively connected with a U.S. trade or business must pay a withholding tax on the share of that income allocable to its foreign partners. The IRS calls this section 1446 withholding. Whether it applies depends on the LLC’s activity in the United States.

Both points depend on the facts of your company. Review them with a tax professional before the new member joins.

Do you need a new EIN?

Usually not. Under IRS regulations, when a disregarded entity becomes recognized as a separate entity, it must use its own EIN if it already has one. If it never had its own EIN, it must get one and stop using the owner’s number.

A foreign-owned single-member LLC normally already has its own EIN, because it needs one to file Form 5472.

What about BOI reporting?

LLCs formed in the United States no longer have to file beneficial ownership information (BOI) reports with FinCEN. The exemption started in March 2025 and became final with the rule published on August 14, 2026. Adding a member does not create a BOI filing obligation for a U.S.-formed LLC.

The obligation still applies to companies formed outside the United States and registered to do business in a U.S. state.

Common mistakes

Signing a verbal or informal agreement instead of amending the operating agreement.
Not filing Form 1065 for the first partnership year, because the business “did not change”.
Treating a purchase of part of the owner’s interest as if it were a contribution to the LLC.
Forgetting Form 8822-B when the responsible party changes.
Leaving the bank with outdated ownership information.

Frequently asked questions

Can I add a member to a single-member LLC?

Yes. You amend the operating agreement, check your state’s filing requirements and handle the tax change: the LLC becomes a partnership for federal income tax purposes, unless it elects corporate treatment.

Does adding a member change how the LLC is taxed?

Yes. A single-member LLC is disregarded. With two or more members, it is classified as a partnership by default and files Form 1065.

Do I need a new EIN when I add a member?

Not if the LLC already has its own EIN. The LLC keeps it. If the LLC used the owner’s number, it must get its own EIN.

What are the tax consequences of adding a member to an LLC?

It depends on how the member joins. If the new member buys part of your interest, you may owe tax on the gain. If the new member contributes money to the LLC for a new interest, the contribution is generally not taxable. In both cases the LLC starts filing partnership returns.

How do I add investors to my LLC?

The same way as any new member: amend the operating agreement, define the investor’s percentage, rights and share of profits, and handle the partnership tax filings. Investors are members for tax purposes.

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First published January 5, 2026. This article is general information, not tax advice for your situation. LLC amendments | Book a free call