Multi-member LLC
An LLC with two or more members. Defaults to partnership treatment for federal tax.
Definition
A multi-member LLC has two or more owners (members). Federal tax treatment defaults to partnership: the LLC files Form 1065 partnership return with K-1s allocating income to each member. Multi-member LLCs are not subject to Form 5472 in the SMLLC sense; foreign-ownership disclosure happens via Form 1065 schedules.
Context
Most non-resident bootstrap founders start as single-member LLCs and transition to multi-member only when adding a co-founder or spouse.
Example
Two co-founders from Pakistan share ownership of a Delaware LLC 50/50. The LLC is multi-member, files Form 1065, and issues K-1s to each member each year.
Common pitfalls
- Adding a member to a single-member LLC changes federal tax treatment automatically; coordinate with CPA.
- Multi-member Operating Agreements are substantially more complex than single-member templates.