Can an LLC have investors or shareholders?

November 3, 2023

In Washington State, a Limited Liability Company (LLC) typically does not have shareholders in the same way that a corporation does. Instead, an LLC is typically owned by its members. Members of an LLC are the owners of the company, and their ownership interests are often represented by membership interests or units, which are similar to shares in a corporation but have different characteristics.

While an LLC is not structured with traditional shareholders, it can be organized to have multiple members with varying ownership percentages. These ownership interests are usually outlined in the LLC's operating agreement, which is a legal document that governs the internal operations and management structure of the LLC.

Members of an LLC can include individuals, other LLCs, corporations, or other entities. The LLC's operating agreement can specify the rights, responsibilities, and percentage ownership of each member. In some cases, an LLC may have managing members who are responsible for the day-to-day operations, while other members may be passive investors.

If your long term business goal is to grow your business significantly or sell your business, a corporation structure is usually a better choice.

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