How to Verify Business Ownership for Your LLC
At some point, you may be asked to show proof of ownership, also known as proof of entity, for your LLC. The request often happens when you open a business bank account. If you’ve never needed to prove that you own your LLC, it’s understandable that you might be unsure of what to do next. Here’s what you need to know.
When Will I Need to Show Proof of Ownership for My LLC?
You will need to prove ownership of your LLC to engage in certain transactions. The first time business owners are asked for proof of ownership is usually when they open a business bank account. Other instances include when the LLC purchases property with financing or when the owners sell the business.
Most importantly, you will need to be able to prove ownership of your LLC if an outsider, or another owner challenges your ownership or disputes your percentage ownership in court.
How Do I Show LLC Ownership?
The Delaware LLC Operating Agreement is a “partnership agreement” that establishes the rules and regulations of an LLC. The Members of an LLC sign the agreement setting forth the ownership percentages/units, management structure, and rules for how to sell interests in the business. Delaware requires that every LLC have an operating agreement.
You can obtain an operating agreement for your LLC at the time of formation. Many registered agents will include the agreement in their formation packages, as IncNow does with the Complete and Now packages. Each member should store the agreement in a safe place since it is an internal agreement that the registered agent will not typically keep a copy of in their records.
You can present the LLC Agreement to the bank to establish ownership. You can also show the cover letter sent with our package to your bank to show you ordered the LLC.
What If I Need More Proof of Ownership?
If your bank requires more proof of ownership and connection to the LLC, we can prepare a Statement of Organizer. A Statement of Organizer is a document that states the initial members or managers of an LLC. The authorized person/organizer at IncNow prepares this document. While the Operating Agreement should be sufficient proof of ownership, some banks require further assurance. IncNow can provide this document at the time you form a company or up to 20 days after formation. Our customers find that opening a bank account after forming a company with us is normally remarkably easy. Read more about the IncNow Advantage here.
Can You Look Up Who Owns an LLC?
The members of a Delaware LLC are not typically public record, at least not through the Delaware Secretary of State. The members of an LLC are documented in the private LLC Ageement.
MORE: Can a Non-Profit Be an LLC?