Transferring LLC membership, state by state.
A membership interest is not a share of stock. It usually cannot be sold to whoever wants it, and the document that says so is your own operating agreement, which most people read properly for the first time on the day of the transfer. Consents come first, then the assignment, then the tax and the state record. Pick your state.
Four things that decide the transfer.
Transfers go wrong on process rather than on intent. The order is fixed: the agreement first, the statute behind it, the paperwork next, and the tax position underneath all of it.
The operating agreement governs first
Most operating agreements restrict transfers, and they do it deliberately, because the other members chose each other. Consent requirements and outright restrictions live there, and they get read before anything is agreed with a buyer rather than afterwards.
What the state does after that
Where the agreement is silent, or where there is no agreement at all, the state's default LLC statute decides what a transfer actually transfers. Those defaults are set state by state, which is why the same assignment can land differently in two states.
A written assignment agreement
The transfer runs on a signed assignment agreement, an amendment to the operating agreement where the membership itself changes, and updated capital accounts in the books. Handshake transfers are the ones that surface years later when the company is being sold.
Two sides, two tax positions
The selling member typically owes capital gains tax on the appreciation in the interest. The incoming member starts with a new basis. Both are reported federally and at state level, and the books have to reflect the change rather than describe it later.
The buyer and the seller agree in an afternoon. The paperwork is what makes it real.
Pick your state.
Each state page covers transferring a membership interest under that state's LLC statute: the consents to collect, the assignment agreement and amendment to sign, whether the state wants its record updated, and how the tax side gets reported.
A clean handoff, in four steps.
You agree the deal. We work through the agreement, the consents, the assignment and the amendment, and update the state record where that state asks for it.
Read the agreement
The operating agreement decides whether the transfer is possible at all, who has to consent, and on what terms. It is the first document opened, and it usually contains at least one surprise.
Collect the consents
Written consent from the members the agreement requires, recorded properly. This is the step that gets skipped while everyone is friendly, and the step that is missing when they stop being friendly.
Draft and sign the assignment
The assignment agreement transfers the interest and sets the terms. The operating agreement is amended where the membership changes, and both are signed by everyone the agreement says has to sign.
Books, record and tax
Capital accounts updated, the state record amended where that state requires it, and the transfer reported on the federal and state returns for the year it happened in.
Members change. What matters is whether the documents caught up.
The rest of Change or convert.
Every one of these is built the same way: a national explainer above its state pages. They are the filings that sit closest to this one.
Convert Corp to LLC
Corporation to LLC, state by state
All 51 states → HubConvert LLC to Corporation
Converting an LLC to a corporation, state by state
All 51 states → HubSole prop to LLC
Sole proprietorship to LLC, state by state
All 51 states → HubDBA filing
The DBA filing, state by state
All 51 states → HubLLC Domestication
LLC domestication, state by state
All 51 states → HubDBA filing
Filing a DBA, state by state
All 51 states → HubAmendment
Filing an amendment, state by state
All 51 states → HubForeign qualification
Foreign qualification, state by state
All 51 states →The full index lives on Change or convert.
The questions members ask before they sign.
Can I sell my LLC membership to anyone?
Usually not without consent. Membership interests are not stock, and most operating agreements restrict transfers on purpose, because the members chose each other and did not agree to be in business with a stranger. The agreement sets out who has to approve a transfer and what the incoming member actually receives, and that comes before any deal is agreed.
What is an assignment agreement?
It is the written document that transfers the interest from one member to another, signed by both. It records what is being transferred, on what terms and from what date. Every state page treats it as the core document of the transfer, alongside the operating agreement amendment that reflects the new membership and the updated capital accounts in the books.
Do I have to tell the state?
Sometimes. Some states want the record updated when the membership changes, and some do not hold membership details in the first place. It is one of the genuinely state-specific parts of a transfer, which is why each state page has a section on it. Where an update is required it is a filing, not a notification, so it has its own process.
What are the tax consequences?
The selling member typically owes capital gains tax on the appreciation in the interest, and the incoming member starts with a new basis in what they bought. Both positions are reported federally and at state level, and the capital accounts in the company's books have to be updated to match. Getting the books right at the time beats reconstructing them later.
Do we have to amend the operating agreement?
Where the membership itself changes, yes. The agreement lists who the members are and what each of them holds, so a transfer that is not reflected in it leaves the company's own governing document describing a company that no longer exists. The amendment is signed at the same time as the assignment rather than added at some point afterwards.
What if there is no operating agreement?
Then the state's default LLC statute governs the transfer, and those defaults were not written with your deal in mind. They decide what a transfer conveys and what the other members can do about it, and they differ from state to state. This is the situation where transfers stall, because there is no agreed procedure for anyone to follow.
Keep going, in order.
Change or convert
Every hub in change or convert, in one place.
Open the index → IndexAll 51 state guides
Every filing a business does, organised by jurisdiction.
Open the index → ServiceCompliance calendar
Every deadline that touches your entity, watched.
Track deadlines → ServiceTalk to a specialist
A person who files these every day, not a call centre.
Get in touch →