When two or more LLC’s want to merge, they must first make the formal decision to merge (Internal Action) and then file the paperwork with their formation state/states (External Action) to merge the two entities so that only one entity exists after the process.
01 Internal Process
When an LLC wishes to take action (i.e. Change its name, add members, dissolve, merge, etc.) it must formally decide to take that action. This is often done through the LLC’s operating agreement. That is any change to the LLC is reflected in the operating agreement with all the other terms and conditions of the operating agreement. Then, all the members(if member-managed) or managers (if manager-managed) sign the operating agreement, making the decision formal.
02 External Process
Once the LLC’s have decided formally to merge, the surviving entity must file a certificate of merger with the formation state. The entity being merged into the surviving entity no longer exists after the conclusion of this process and often is listed as “Merged Out” in the state’s data-base.
Plan of Merger
Many states require a plan of merger be filed with or as part of a certificate of merger. A plan of merger describes how the merger will take place, including how ownership interests in the second LLC (merged out LLC) will be transferred for ownership interests in the first LLC (the surviving LLC). Check with the merger state for merger filing requirements.
Two or more states
If one of your LLC’s being merged is from a foreign state, then you may have to “merge out” or withdrawl from the foreign state after your merger filing has been completed. Check with the foreign state to find out what is required.
03 Don’t Forget
Don’t forget to notify those who may be affected by elimination of your merged-LLC, including:
> vendor accounts
> IRS if it has an EIN
> Registered Agent
> Banking or loan accounts