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An LLC can be filed with the owners as employees, but what about after? Every time you add a new employee who is to be part owner of the company, you'd have to re-file. Is there a way to avoid this? Is there a type of company where employees are automatically part owners?

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  • I don't know about every employee, but one can look into partnerships, such as in law firms. However, if you are making someone a part owner, you are also reducing the property rights of one or more existing owners, which usually is/must be accompanied by compensation in some form. Such as a buy-in, which is unusual for most employers.
    – sharur
    Apr 22, 2022 at 21:34
  • In what jurisdiction?
    – ohwilleke
    Apr 22, 2022 at 23:37

1 Answer 1

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An LLC can be filed with the owners as employees, but what about after? Every time you add a new employee who is to be part owner of the company, you'd have to re-file. Is there a way to avoid this?

In the United States, almost no U.S. state or territory, if any, require that the ownership of the company be disclosed in state business records. Instead, that is generally handled in the internal records of the company. So, the notion that something has to be filed with the government every time there is a change of ownership is mistaken in the case of the U.S. (with the caveat that a new federal law that was supposed to be effective in January 2022 but has not yet been fully implemented requires some closely held companies in the U.S. to file information about large percentage owners with an anti-money laundering agency that is not available to the general public).

Outside of the United States, however, public disclosure requirements of closely held entities owners, are common.

What is publicly filed is typically called "Articles of Organization" which basically contains a name, initial registered agent, and whether the entity is manger or member managed. Membership is usually governed by an Operating Agreement which is not a matter of public record.

Is there a type of company where employees are automatically part owners?

There is no type of entity in the United States that works like that.

But, a grant of ownership, or a status as a beneficiary of a corporation's employee stock ownership plan, can be made a standard part of a particular corporation or other entity's standard employee hiring paperwork, and while this is unusual, this isn't terribly uncommon (although usually restricted to only some classes of employees), especially in unionized workplaces.

These ownership records are maintained privately by the company, a third-party nominee stock holder that manages records of stockholders for a company, or by an employee stock ownership plan administrator, rather than a government entity, and would typically involve too small a percentage of ownership in too large of a business to require it to be disclosed to the federal money laundering agency.

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