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Single-member or multi-member LLC: what changes when there are two of you

What changes when an LLC has several owners instead of one: tax, yearly filings, what the operating agreement must settle, and adding a member later.

Updated 17 September 2026Checked against the sources named in the text

One owner or several isn't about size. For tax, the IRS ignores a single-member LLC and treats the owner as the taxpayer, and the company files one information return a year. An LLC with two or more members is a partnership with its own tax return, and its operating agreement has to settle in advance what happens when the owners disagree. Both are common. Here's what changes.

Side by side

One owner or several, for a foreign-owned LLC
Single-member
Multi-member
Federal tax
Disregarded: the owner is taxed directly
A partnership: it files a return and allocates profit to the members
Yearly federal filing
Form 5472 with a pro forma Form 1120
Form 1065, with a Schedule K-1 for each member
Form 5472
Yes, every year
No, a partnership doesn't file it
Withholding
None on income from work done abroad
On foreign members' shares, but only of income connected with a US business
Tax form for US clients
The owner's W-8BEN
The company's W-9
Operating agreement
Short, but banks still ask for it
Settles ownership, management, payouts and exits
Adding an owner
It becomes a partnership from that date
Amend the agreement and add a K-1 for the new member
State filings in Wyoming and Delaware
The same
The same

What the operating agreement has to settle

With one owner, the agreement records that there's a single owner, that the company is separate from them, and how it would be closed. With two or more, it has to settle the things co-owners otherwise argue about: the ownership split, who manages and signs, which decisions need a majority and which need everyone, how and when profit is paid out, whether a member can sell their share and to whom, and what happens if a member leaves, dies or stops contributing. Make sure yours covers each of these. Standard and Premium record the ownership split, so the agreement and the tax return match.

What changes at the bank

Every owner of 25% or more is identified with a passport and proof of address. Banks and payment processors ask which members can sign, and the operating agreement answers that. A multi-member LLC gives US clients a W-9, as a US partnership. A single-member LLC's foreign owner gives a W-8BEN. Marketplace tax interviews follow the same rule.

Adding a member later

When a single-member LLC takes on a second member, it becomes a partnership for federal tax from that date. The operating agreement is amended, the new member is identified to the bank, and the tax year is split: Form 5472 with a pro forma Form 1120 for the part before the change, and a partnership return for the part after. In Wyoming and Delaware nothing is filed with the state, since members aren't on the articles. Tell your accountant the date when it happens, because a split year is routine if they know in advance and awkward if they find out in April.

Adding someone for the wrong reason

Founders sometimes add a co-owner for a reason other than ownership: a spouse for inheritance, a friend to reassure a bank, an investor on a promise. Each one turns the company into a partnership, with everything above, and a co-owner is a co-owner whatever the reason. If the point is inheritance, the operating agreement can say what happens when you die without adding anyone now. If the point is investment, an investor in an LLC is a member with the rights the agreement gives them, and that's a conversation for a lawyer.

Questions

The questions this guide gets asked.

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No. A multi-member LLC taxed as a partnership files Form 1065 with a Schedule K-1 for each member. Form 5472 is for corporations and foreign-owned single-member LLCs.

Yes. The company becomes a partnership for federal tax from that date, the operating agreement is amended, and that year's filing is split in two. In Wyoming and Delaware nothing is filed with the state.

A W-9, as a US partnership, with the company's EIN. A single-member LLC's foreign owner gives a W-8BEN instead.

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