Merging two limited liability companies (LLCs) is a common move among business owners since it allows them to benefit from the limited liability protection this business structure offers. Whether you’re looking to combine forces with a partner or expand the reach of your LLC, there are important steps you should take in order to make sure you’ve taken the right steps when merging two LLCs in 2023.
First, you’ll need to create a written plan of merger. This plan should include the name of both LLCs involved, the surviving LLC’s name, and its main place of business. It should also list the basis and manner for changing the interests of both LLCs into the obligations or interests of the surviving LLC. The plan of merger must gain approval from all LLC members or those shareholders affected if either party is a foreign LLC.
Once the plan has been approved, you’ll need to create the articles of merger. This document should include the name of the LLCs involved, their dates of organization and jurisdiction, plus a declaration that the plan of merger was approved. You’ll also need to include the name and address of the surviving LLC, any necessary changes to the articles of organization, and the effective date of the merger. The articles of merger then need to be filed with the secretary of state or the state agency in charge of business filings.
In addition to filing the documents, you’ll need to alert the relevant parties that the merger is happening. Notify the IRS (if there’s an EIN), any vendor accounts, the registered agent, and any banking or loan accounts. Doing so will help streamline any technical or financial changes and make sure the books are in order for both LLCs.
Merging two LLCs can be a complex endeavor, so it’s important to get familiar with your state’s laws beforehand. Regulations may vary from state to state, so you’ll need to check your state’s business authority website or contact an attorney to get up-to-date information when preparing for a merger in 2023. It may also be beneficial to talk to an accountant since they’ll have the necessary expertise to help ease the transition and make sure the company is set up properly for the duration of the merger.
At the end of the day, a merger between LLCs is a great way to combine resources and gain added protection from personal liability. But it’s important to make sure you’ve followed all the necessary steps to ensure that the process goes as smoothly as possible. By taking the time to understand the regulations, create a plan of merger, alert the relevant parties, and file the articles of merger with the state, you’ll be able to make sure the merger goes off without a hitch, and your company is properly set for the year ahead.