Yes, you can buy an LLC from someone. In practice, buying an LLC from its current owner means either purchasing that owner’s membership interest in the company or having the company sell you its underlying assets. Both routes are legally recognized, but they carry very different liability, tax, and paperwork consequences, and the LLC’s own Operating Agreement usually controls whether the sale can happen at all.
Two Ways to Structure the Purchase
The first decision is what you are actually buying: the owner’s stake in the company, or the company’s things.
In a membership interest purchase, you buy the seller’s percentage ownership in the LLC. The company itself keeps going. Same tax ID, same contracts, same bank accounts, same licenses. You step into the seller’s shoes. That is the simple part. The harder part is that you also inherit every liability sitting inside the LLC, including debts, pending lawsuits, and obligations nobody told you about.
In an asset purchase, the LLC sells specific assets to you (or to a new entity you form) — equipment, inventory, intellectual property, customer lists, and so on. You generally take on only the liabilities you agree in writing to assume. That gives you more protection from hidden debts, but each asset has to be transferred individually, and contracts, licenses, and permits often have to be reassigned one at a time.
Small-business deals often use a membership interest purchase because retitling every asset is a slog. If the LLC has a complicated history or you are worried about undisclosed obligations, the asset structure is usually safer. The choice also drives the tax outcome for both sides, which is covered further down.
Check the Operating Agreement First
Before anything else, read the LLC’s Operating Agreement. It is the internal contract among the members, and it almost always sets rules about whether a member can sell to an outsider and what the seller has to do first.
Member Consent
Most Operating Agreements require some level of approval from the existing members before an interest can be transferred. Some require a simple majority; others require unanimous consent. If the agreement is silent, default state LLC law fills the gap. Under the model most states have adopted in some form, someone who receives a transferred membership interest gets only the right to receive distributions unless all remaining members agree to admit them as a full member. That means you could pay for 100 percent of the financial interest and still have no voting or management authority if consent is not properly obtained.
Right of First Refusal
Many Operating Agreements give the other members a right of first refusal. The seller has to notify them in writing of your offer, and any member can match your terms and buy the interest instead. The seller can only proceed with you after every member has declined in writing. Skipping this step opens the door to litigation and can void the sale.
Due Diligence Before You Pay
Because a membership interest purchase pulls you into every existing obligation the LLC carries, careful due diligence is not optional. It is the single most expensive step to skip.
Financial and Legal Review
Ask for at least three years of financial statements, tax returns, and bank records. Look for consistent revenue, unusual expenses, and outstanding debts. Search public records in every jurisdiction the LLC operates in for liens, judgments, and lawsuits. Unpaid taxes — especially payroll taxes — can create personal liability for a new owner in some circumstances, so confirming tax compliance matters.
Good Standing
Request a certificate of good standing (sometimes called a certificate of status) from the state where the LLC was formed. It confirms the entity exists, has not been dissolved, and is current on its state filings. If the LLC is not in good standing because of missed annual reports or unpaid fees, you may need to fix that before closing. If the LLC is foreign-qualified in other states, check its standing there too.
Contracts
Read every material contract the LLC holds: leases, vendor agreements, customer contracts, loan documents, insurance policies. Watch for change-of-control clauses that let the other party terminate or renegotiate when ownership shifts. Finding out about one of these after closing can mean losing a key lease or a major customer. Also flag noncompetes binding current members or employees, and any pending or threatened litigation in the company records.
The Purchase Agreement and Related Documents
The centerpiece of a membership interest deal is a written Membership Interest Purchase Agreement, or MIPA. MIPAs are used in acquisitions of all sizes.1U.S. Securities and Exchange Commission. SEC EDGAR Filing – Membership Interest Purchase Agreement
A workable MIPA covers at minimum:
- The legal names of the buyer, the seller, and the LLC.
- The exact percentage of membership interest being transferred and the total purchase price.
- Representations and warranties from the seller about the LLC’s financial condition, legal standing, and the absence of undisclosed liabilities or liens on the interest.
- Indemnification requiring the seller to compensate you if a pre-closing liability appears after the deal closes.
- Closing conditions covering any approvals, consents, or filings that must be complete before the transfer takes effect.
Templates exist online, but a template may not match your state’s LLC statute, and a thin indemnification clause can leave you exposed to problems the seller should have disclosed. An attorney draft or review is worth the cost on any transaction with meaningful money on the line.
Alongside the MIPA, the transaction typically involves a resignation letter from the outgoing member if they held a management role, an amended Operating Agreement reflecting the new membership, and written waivers from any members who held a right of first refusal.
Taxes for Buyer and Seller
The IRS treats most LLCs with two or more members as partnerships, so partnership tax rules apply to the sale.
The Seller’s Capital Gain
The seller’s profit is generally treated as a capital gain.2Office of the Law Revision Counsel. 26 U.S. Code 741 – Recognition and Character of Gain or Loss on Sale or Exchange Long-term capital gain rates are typically lower than ordinary income rates when the seller held the interest for more than a year. There is an important exception. If the LLC holds what the tax code calls “hot assets” — primarily unrealized receivables and inventory — the portion of the seller’s gain attributable to those assets is reclassified as ordinary income and taxed at the seller’s regular rate.3Office of the Law Revision Counsel. 26 U.S. Code 751 – Unrealized Receivables and Inventory Items Sellers usually need a tax professional to split the capital gain portion from the ordinary income portion.
The Buyer and the Section 754 Election
You may pay more (or less) than the LLC’s book value of its assets. Without a special election, your share of depreciation and other deductions still runs off the LLC’s original cost basis in those assets, not what you paid. A Section 754 election lets the LLC adjust the tax basis of its assets to match your purchase price,4Office of the Law Revision Counsel. 26 U.S. Code 754 – Manner of Electing Optional Adjustment to Basis of Partnership Property which can increase your future depreciation deductions and reduce taxable income from the LLC.
The election is made by the LLC, not by you individually, and once made it applies to all future transfers of interests in the company, not just yours.5Internal Revenue Service. FAQs for Internal Revenue Code (IRC) Sec. 754 Election and Revocation Because it is irrevocable for the year and has ongoing effects, negotiating for it should be part of your purchase agreement, and both sides should talk to a tax advisor before the LLC commits.
EIN
If the LLC continues to exist after the ownership change — which is what happens in a membership interest purchase — it generally keeps its existing Employer Identification Number.6Internal Revenue Service. When to Get a New EIN A change in members alone does not require a new EIN. If the deal converts a multi-member LLC into a single-member LLC (or vice versa), the change in tax classification can trigger additional IRS steps, and that situation warrants a call with a tax professional.
Filings and Notifications After Closing
Once the MIPA is signed and paid, several filings and notifications are needed to make the ownership change real in the outside world.
State Filing
Most states require the LLC to file an amendment to its formation documents (a Certificate of Amendment or Articles of Amendment) with the Secretary of State to update the public record on members or managers. Filing fees vary by state, generally ranging from about $10 to $150 for standard processing, with expedited options costing more. Some states skip the amendment for routine membership changes but require the update on the next annual or biennial report. Check with the Secretary of State in the state of formation.
IRS Form 8822-B
You must notify the IRS of the change in the LLC’s responsible party by filing Form 8822-B within 60 days of the transfer.7Internal Revenue Service. About Form 8822-B, Change of Address or Responsible Party – Business The responsible party is the individual with authority to control the entity’s funds and assets. Missing the deadline does not carry a specific penalty on its own, but it causes problems on future tax filings and IRS correspondence, because the agency’s records will still show the former owner.8Internal Revenue Service. Form 8822-B, Change of Address or Responsible Party – Business
FinCEN Beneficial Ownership
Under a March 2025 FinCEN interim rule, entities created in the United States are exempt from beneficial ownership information reporting,9Financial Crimes Enforcement Network. Beneficial Ownership Information Reporting and as of 2026 domestic LLCs are not required to file or update these reports.10Federal Register. Beneficial Ownership Information Reporting Requirement Revision and Deadline Extension FinCEN has indicated it will issue a final rule after public comment, so check FinCEN’s site if your closing is still pending.
Banks, Lenders, and Contract Counterparties
Banks holding the LLC’s accounts need notice of the ownership change before the new owner can access or manage them, and they typically want a copy of the signed MIPA and the filed state amendment before updating authorized signers. Lenders, landlords, and other contract parties may also need to be told, especially where a change-of-control clause could trigger default or early termination. Due diligence is where you find out who requires notice.
State Employment Accounts
If the LLC has employees, notify the state labor or workforce agency. The LLC’s unemployment insurance experience rating — which sets the tax rate the business pays — may transfer to the new owner, stay with the old owner, or be reset, depending on state law. Contacting the state unemployment tax agency promptly after closing keeps the account current and clarifies your contribution rate.
Update the LLC’s Internal Records
Government filings are only half the picture. The company’s internal records need to catch up too. Revise the member ledger — the register tracking each member’s name, address, and ownership percentage — immediately after closing. It is the internal proof of who owns what and the first document anyone will pull in a future dispute or transaction.
Amend the Operating Agreement to remove the seller and add you, with your ownership percentage and any management rights spelled out. All remaining members should sign. If you are the sole owner after buying everyone else out, adopt a new Operating Agreement built for a single-member LLC, because the old multi-member version will contain provisions that no longer apply.
Update anything else that still references the prior owner: signatory cards, registered agent designations, and the annual report filing contact. These are small items, and they are also the ones that quietly put an LLC out of good standing when an annual report notice goes to a former owner’s address and nobody sees it.