ENTITY FLOW CHART OPTIONS
The following examples are for demonstration purposes only.For those with no existing entity and do not want to be a Member/Owner, giving your name and SSN to the IRS (own nothing , control everything), the IRS specifically frowns upon “nominee” or “temporary” type Membership for the sake of applying for EIN. However, LLC statute clearly allows for Members to vote in new Members and Members can resign. Some folks may allow their existing entity to be a Member of your LLC, which will be reflected on your LLCs application for EIN with the IRS and then may resign shortly after you form another entity to replace them. The IRS can then be notified of the change. Refer to below examples.
You can add any number of entities to below examples according to your needs.
OPTION 1:2 LLCs
If NO EIN needed:Form 2 LLCs, one being the Member of the other.
They both need to officially be filed and in existence then Members can sign off.
OPTION 2:2 LLCs – you have no existing entity & you do not want to remain Member
Form LLC#1with you as Member
LLC #1 applies for EIN with you as the Member
Form LLC #2 making LLC #1 Member
LLC #2 applies for EIN with LLC #1 name and EIN as Member
You resign as Member of LLC #1 and make LLC #2or CORP SOLE or TRUST Member of LLC #1
LLC#1 notifies IRS of change (use sample letters and instructions)
LLC #1 is Member of LLC #2 and LLC #2 is Member of LLC #1
THEN
**Can add a 3rd entity
For diversity
MEMBERSHIP IS INTERCHANGEABLE
YOU CAN ADD AS MANY ENTITIES AS YOU WISH
OPTION 3:An existing entity forming1 or 2 new LLCs
Form first new LLC #1with existing entity as Member
LLC #1 applies for EIN with existing entity name and EIN as Member
Form second new LLC #2 making first new LLC #1 Member
LLC #2 applies for EIN with LLC #1 name and EIN as Member
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(If existing Member of new LLC #1is not in your control and will be replaced withnew LLC #2 very soon, you can obtain a signed resignation in advance, from that existing Member that just needs a date filled in for resignation to protect the Membership and control of LLC #1 – only a Member can vote in another Member so be sure to preserve that control.
THEN
Existing entity can resign as Member of newLLC #1 make new LLC #2or CORP SOLE or TRUST Member of new LLC #1
New LLC #1 notifies IRS of change (refer to sample letters and instructions)
1stnew LLC is Member of 2ndnew LLC and 2ndnew LLC is Member of 1st LLC
**Can add a 3rd entity
For diversity
MEMBERSHIP IS INTERCHANGEABLE
YOU CAN ADD AS MANY ENTITIES AS YOU WISH
OPTION 4:1 Corporation Sole 1 or 2 LLCs - You have no existing entity and you do not want to be a Member
Form 1 Corporation Sole
Corporation Sole apply for EIN (SS# not required)
Form 1 LLC
Make Corporation Sole Member of LLC
LLC apply for EIN with Corporation Sole Name and EIN as member
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