Yes, in most states, a minor can be an LLC member. A minor is simply any individual who is under the age of 18, and in the United States, an LLC’s members (owners) can be individuals or other business entities such as other LLCs or corporations.
An LLC can have any number of members—anywhere from one to thousands and there is nothing that prevents a minor from being a member in an LLC.
However, practical problems tend to arise where an LLC has minor members; especially where, as is typically the case, the LLC is member-managed—that is, all the members share responsibility of the day-to-day running of the business.
Problems can arise when minors own LLCs because special legal rules also restrict the ability of minors to make and break contracts.
Although these rules tend to vary from state to state, most types of contracts entered into by minors are voidable—that is, the minor can decide to either honor or void (end) the contract.
If the contract is voided, the minor is expected to ordinarily give back anything of value he or she received from the other party, such as money or property. In most states, however, a minor cannot void a contract for necessities like food, clothing, or lodging.
Many states don’t permit minors to enter into some types of contracts at all on their own, such as contracts for the purchase or sale of real property. Owing to these special rules, a good number of people may be reluctant to deal with an LLC that is owned solely by a minor or that is managed by a minor-member because they fear that any agreements they enter into with the LLC won’t be legally binding.
Be that as it may, this problem can be avoided if there are other members of the LLC who are over age 18—for instance, the minor’s parent or parents or an adult sibling or friend. These adult members are allowed to sign all contracts on the LLC’s behalf.
You can also file a statement of authority with your Secretary of State noting that only the adult members serve as the LLC’s agents with the authority to legally bind it to contracts.
Another alternative is to choose a manager-management structure for the LLC. Under this structure, the LLC business is managed by one or more designated managers. The managers may be LLC members, non-members/outsiders, or a combination of the two.
Such managers would be adults, while the minor-members would be left as passive investors not involved in the LLC’s day-business operations. In most states, member-management is the default for LLCs.
To change this, you are expected to create a manager-management structure in your LLC’s article of organization or in a written LLC operating agreement.
Table of Content
Who Can Be a Member of an LLC?
An LLC Member is simply an owner of an LLC. Any person or company can own an LLC, and that person or company is called an LLC Member. A person/company is still an LLC Member whether they own 100 percent of the LLC or 1 percent of the LLC (or less).
Any person or company in the world can be an LLC Member in any state. After you form an LLC, you elect Members (owners) of the LLC. These legal persons (ex: companies) and natural persons (ex: people like you and I) can be a Member of an LLC:
- US citizens
- US residents
- Non-US citizens
- Non-US residents
- US immigrants
- US foreigners
- Other LLCs
- Other Corporations (C-Corp and S-Corp)
- Other legal entities (besides LLCs and Corporations)
- Pension Plans
- Individual Retirement Accounts (IRAs)
- Other legal entities
How Many Members Can an LLC Have?
A limited liability company (LLC) can have one or more members, but most states require at least one member for an LLC to be formed. States do not, however, enforce any limitation on the number of members an LLC can have.
Have it in mind that a limited liability company that operates with only one member is called a single-member LLC, and a company with more than one member is called a multi-member LLC.
In the United States, Limited liability companies that are taxed as S corporations and cannot contain more than 100 shareholders carry a special status.
A single member of an LLC is in charge of all important aspects of that LLC. This includes filing the articles of incorporation. Each state has its own custom form that must be filled out by the owners while they are forming an LLC.
If the state requires at least two owners to form an LLC, the most convenient way to do this will be to involve a partner/spouse or perhaps a reliable family member as a second owner. In this situation, the second member of the LLC would not be held liable or be in charge of the state tax obligations.
If you are missing an additional member to form an LLC, it might make more sense to form a corporation instead.
Regulations for Limited Liability Company in the United States
Regulations for forming an LLC vary by state, but there are significant similarities among them. Howbeit, important regulations to note include;
Names for LLCs usually are expected to contain the phrase ‘limited liability’ or a related acronym, such as “LLC.” Just like with other forms of business ownership, names are expected to be original and dissimilar to all registered trade names. In some states, such as Georgia, LLC names also must not contain any language that suggests the business provides any function other than that for which it is specifically incorporated according to the company’s articles of organization.
Articles of Organization
Just like the articles of incorporation for traditional corporations, LLC owners are expected to file their articles of organization with the Secretary of State before conducting business.
The articles are expected to include select company information, such as the name and mailing address of the company and its organizers, and the physical address of operational facilities. It should also stipulate whether your LLC will be managed by its owners or by a hired management team.
Annual Reports and Registration
LLCs are also expected to file annual reports with the Secretary of State, much like traditional corporations do with the Internal Revenue Service. Annual reports will have to contain updated company information such as names and addresses, the contact information of registered agents, federal employment identification numbers, and any relevant disclosures requested by the Secretary of State. Annual registration fees, usually less than $100, are also required.
There is nothing that prevents a minor from being a member of an LLC. Although minors may possess rights and own property, legally, they have less standing to manage their financial affairs than adults. In the same vein, although minors may enter contracts and thereby acquire contractual rights, the rules regarding enforcement of contracts between minors and adults are different than those for contracts between adults.
Most notably, a contract between an adult and a minor is generally “voidable” at the option of the minor. A minor may enforce an agreement against an adult, but the adult may not be able to enforce the agreement against the minor.
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