Virginia Multi-Member LLC Basics

A multi-member LLC is a business entity that resembles both a partnership and a corporation, and carries the benefits of each.

A Virginia limited liability company (LLC) is a business entity that, in part, resembles both a sole proprietorship/partnership and a corporation.

An LLC can have one or multiple owners, or “members,” who share an interest in the business. Not all LLCs require multiple members, though most are multi-member entities.

Virginia Multi-Member Limited Liability Company

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In a multi-member LLC, the different owners, or “members,” share a stake in the business.

A Virginia multi-member limited liability company (MMLLC) is a business entity with multiple interest-holding members.

This means that ownership is shared between all who hold a stake of interest in the business.

A MMLLC operates differently from a single-member limited liability company (SMLLC) because there is no longer a single managing force.

Each member has a voice in how the business is managed, as well as how the business operates.

Forming a Multi-Member Limited Liability Company

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Forming a multi-member LLC is relatively easy. However, it’s still wise to speak with an attorney about the type of organizational structure that works best for you.

Forming an MMLLC follows the same fundamental structure as any other LLC formed in Virginia. However, a multi-member LLC requires additional paperwork and organization.

Registering a Name

You must choose an operating name – a “fictitious” or “doing business as” (DBA) title – and register that name for your business purposes.

You cannot conduct business under a DBA title that has not been registered with the state.

Failing to register your business name before operating can result in legal action and state fines.

Articles of Organization

Once you have registered a business name, you must establish and file your articles of organization.

These documents outline the registered name of your business, the names of the members holding interest, the purpose of the business, and how the business will file for taxes.

This document does not explain how the business will operate—it gathers the fundamental information necessary to form the foundation of the business.

Operational Agreement

Unlike the articles of organization, your operational agreement is formed in order to establish how the business is operated on a day-to-day basis.

This acts as the basic framework establishing how your business is going to operate, as well as defining how your business is managed.

Your MMLLC is either member-managed, or manager-managed.

Along with your partnering members, your business must outline what management style it adheres to, and who is in charge of management.

Remember, ownership does not equate to management.

Some interest-holding members are not interested in the management aspect of the business, and will therefore formally forfeit that responsibility to the interested members.

Delegation of management among members creates a member-managed business model.

Sometimes, all members agree to outsource for management, which establishes the business as a manager-managed entity.

Ultimately, your operational agreement will establish your business’ management structure, who is specifically managing the business, and the responsibilities and powers of the managing agent (i.e. the ability to hire/fire employees, to make executive business decisions, outsource labor, etc.)

Multi-Member Partnership Agreement

Unlike a single-member LLC, you are collaborating with multiple “co-owners” of the business.

Therefore, it is essential that a partnership agreement is established before business is conducted.

A partnership agreement is a document that is drafted and signed by all members who agree to the terms of the document.

This contract outlines the responsibilities, financial distribution, and general activities of each member.

For example, if your membership will retain unequal distributions of income or losses, you must establish that in the partnership agreement.

Additionally, processes concerning the business’ structure—such as the buyout of an existing member or how a member’s share is absorbed or transferred upon death—must be established.

Therefore, the business can continue to operate (or become disbanded) upon the absence or death of a member.

The partnership agreement is a document that should be drafted and revised in order to consider each member’s input.

Collaborative effort in forming the partnership agreement protects against later conflict among partners.

Additional Considerations

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Multi-member LLCs face additional tax hurdles when compared to sole proprietorships and single-member LLCs.

An advantage of a multi-member limited liability company (MMLLC) is the protection of member assets against business liabilities.

Therefore, each member is protected against the debt or lawsuit of another member.

A “charging order” can be issued, in which the member’s personal assets remain in tact, but the member’s business interest is charged for payments.

It’s similar to the process of the state garnishment of wages. 

However, the partnership agreement (combined with the structure of the LLC) prevent additional member interests from being affected.

A multi-member limited liability company is also subject to filing a partnership tax on the business.

An MMLLC is required to file taxes as a partnership, whereas an SMLLC is disregarded on the basis of federal taxation.

There may also be income taxes that partnerships are required to file in addition to normal partnership taxes.

It is recommended to consult with an attorney to establish your required taxation procedures.


Multi-member limited liability companies are business entities that boast more of the benefits of a partnership and corporation.

However, establishing your MMLLC is careful legal work.

For this reason, we recommend that you schedule a consultation with a business law attorney in order to plan for your multi-member LLC.

Further Reading

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