Legal Question in Business Law in California

Re: Transferring an LLC

If you are transferring the entire LLC by sale of all memberships, I would check into the following things:

1. The LLC's operating agreement should be amended or replaced to change any personal names appearing within it and to reflect the new owner's operating agreement preferences.

2. Look at the Secretary of State's Web site at www.ss.ca.gov and find forms RA-100, LLC-2 and LLC-12. If there is to be a change of registered agent, the old RA should file an RA-100 resignation form. The LLC-12 is used to amend information on file. An LLC-2 may be necessary if the new owners will be running things differently than shown by the LLC-1 filed when the LLC was first set up.

3. Since the entity will have continuity despite having new owners, many accounts, numbers, etc. will not have to be changed.

4. Nevertheless, since the IRS often treats LLCs as partnerships, you need to ask your tax accountant whether the IRS will expect a final tax return as though the LLC were a dissolving partnership.

5. If the LLC's address will change, everyone it does business with must get a change-of-address notice.

6. If any of the selling members signed personal quarantees (for example, for its premises lease or a business loan), the guarantee should be revoked, if possible; otherwise, take suitable protective steps (such as an indemnity in the sale agreement).

That's all that comes to mind right now; I think having a lawyer go over the specific affairs of this particular LLC would be a good precaution.