A limited liability company (LLC) is a business structure that blends the characteristics of a partnership and corporation. Owners of an LLC are called members, each possessing an interest in the company. Unlike stocks, shares of an LLC cannot be purchased on the open market. However, members are free to sell their interest in the LLC at any time. You might also have the opportunity to purchase shares of an LLC when it is expanding and offering new memberships.
Determine who can buy shares. The LLC's buy-sell agreement specifies the requirements to buy shares. If there is no provision, the LLC can be subject to state laws. LLCs do not have to offer shares to the general public.
Research the LLC's finances before making a purchase. Review the financial books including balance sheets, income statements and cash-flow statements from the current and previous years. It is important to understand the value of the share you intend to purchase.
Negotiate with the LLC members. You must agree to a fair price and your expected contribution to the company. Investors in a business generally provide capital, property or other services. You must have the consent of all LLC members to purchase shares.
Review and sign the sales contract specifing the terms of the purchase agreement and your ownership rights. Unless the transaction only involves a small amount of money, you should have an attorney review the contact to ensure your protection.
Report the sale by completing and filing Form 8594, asset acquisition statement. Both you and the seller will need to complete, sign and submit the forms with your IRS individual income tax return.
Jeannine Mancini, a Florida native, has been writing business and personal finance articles since 2003. Her articles have been published in the Florida Today and Orlando Sentinel. She earned a Bachelor of Science in Interdisciplinary Studies from the University of Central Florida.