Changing from a Single member LLC to a Multi Member LLC *****

[Eddie Symmonett]

Hello Bp,

So I just spoke to my attorney in regards to changing my SMLLC to a MMLLC for added limited liability protection and to have my business tax return separate from my personal tax return

However I have some pertinent questions that need to be answered before I can make this change.

1) Can I add 'ghost' members to the LLC ? I wanted to add family members or just a 'made up cousin' to change to a MMLLC. I was told once there is a name, address, and ownership percentage I can add a member. Will the business get in legal trouble/IRS trouble if the other members are not filing the Schedule K-1 forms come tax time?

2) Is there a minimum of ownership percentage ? I was just going to give these 'members' 1% ownership is that okay or would it raise a red flag to governing bodies who look into situations like this.

Has anyone had any similar problems and found a way to resolve it without legal problems? I would hate to be audited because of this. Thank you!

[Ralph Taylor]

Your partnership return must disclose who the partners are, together with their tax id. Don't play games with the IRS. The last thing you want is the tax man on your tail.

Ralph Taylor

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