Buying an LLC in 2026: Membership Interests vs. Assets

Updated October 2026

The short answer

Buying an LLC generally takes one of two forms. In a membership interest purchase, the buyer acquires the owners' interests and the same entity continues, carrying its contracts, history, and liabilities. In an asset purchase, the buyer acquires selected assets, often into a new entity, and the selling LLC keeps the rest. The LLC's operating agreement, the governing state's LLC statute, and its federal tax classification shape how each route works.

Important

This article is general information for founders, not legal, tax, or financial advice. Rules, fees, and filing requirements vary by state and change over time. Nothing here creates a professional relationship of any kind. Confirm anything that affects your business with your state's filing office and a qualified attorney or accountant before you act on it.

“Buying an LLC” sounds like one transaction. In practice it describes two different ones. The business a buyer wants is usually held inside an LLC, and the deal can either take over the LLC itself or lift the business’s assets out of it. The structure chosen affects which contracts and obligations come along, how the purchase is generally reported to the IRS, and which consents and filings are involved.

This piece sits alongside our step-by-step guide to buying a business in your 20s, which covers finding, valuing, and financing a deal. Here the focus is narrower: what is actually being bought when the seller is an LLC.

Membership interests vs. assets, side by side

	Membership interest purchase	Asset purchase
What the buyer acquires	The owners’ interests in the existing LLC	Specific assets (equipment, inventory, customer lists, goodwill) chosen in the deal
The legal entity	The same LLC continues under new ownership	The selling LLC generally continues to exist; the buyer often uses its own entity
Contracts, leases, licenses	Generally stay with the LLC, though some contain change-of-control or consent terms	Generally have to be assigned, re-signed, or re-issued, subject to their own terms
Liabilities	Generally stay with the LLC, including ones not yet known at closing	Generally stay with the seller unless the deal assumes them, though some state rules can reach a buyer
Typical internal approvals	Governed by the operating agreement’s transfer terms, or the state’s default rule	Governed by the operating agreement and the seller’s own approval process
Federal tax reporting (general)	Depends on the LLC’s tax classification (see below)	Form 8594 is generally filed by both sides when the IRS conditions are met

This table describes a common shape, not a rule that applies to every deal. Purchase agreements can shift almost any of these items between buyer and seller, and state law fills in what the documents leave out.

What changes hands in a membership interest purchase?

The buyer generally steps into the existing entity rather than receiving any of its property directly. The LLC keeps its name, its bank accounts, its contracts, and its track record, which is a large part of why buyers consider this route. The same continuity is the main counterweight: the entity’s existing obligations, including ones that surface after closing, generally remain the entity’s obligations. Buyers and their advisors commonly address that through due diligence and through the representations and indemnities negotiated in the purchase agreement.

Does the buyer automatically become a member?

Not necessarily. State LLC statutes commonly separate the economic side of an interest from the right to participate as a member. Delaware’s LLC Act, often used as a reference point, provides by default that an assignment of an LLC interest does not by itself entitle the assignee to become a member or exercise a member’s rights; the assignee shares in profits, losses, and distributions to the extent assigned (6 Del. C. § 18-702). Admission as a member generally follows the LLC agreement, or, if it is silent, the vote or consent of all members (6 Del. C. § 18-704). Other states have their own default rules, and operating agreements frequently override them with transfer restrictions, consent requirements, or rights of first refusal. Our explainer on what an LLC operating agreement is covers the subjects those documents commonly address.

Are there state filings after ownership changes?

It varies by state and by what the state keeps on record. Some states’ formation documents do not list owners at all; others collect manager or member names on recurring reports. Nevada, for example, has LLCs file a list of their managers, or managing members where there is no manager, at formation and every year after, and its statute provides for amended lists (NRS 86.263, as of October 2026). The governing state’s Secretary of State is the source for what, if anything, gets filed after a change in ownership.

What changes hands in an asset purchase?

Here the buyer acquires the specific property listed in the purchase agreement, often through a new LLC formed for the purpose, and the selling LLC generally remains in existence holding whatever was not sold, including its own liabilities unless the buyer agreed to assume them. Because the buyer’s entity is new, contracts, leases, permits, and licenses commonly need to be assigned or re-issued, and each of those depends on its own terms and on the issuing agency.

The asset route is not a complete separation from the seller’s history in every case. Some states have rules under which certain obligations, such as unpaid state taxes tied to a business that is sold, can follow the business to a buyer. Those rules are state-specific, and the state’s tax agency is the source for whether any apply.

For founders forming a new LLC to hold acquired assets, our LLC formation checklist maps the typical steps, and our comparison of the best states to start a business covers where an entity is commonly formed and why a buyer’s home state is often the practical choice.

How is buying an LLC treated for federal tax purposes?

The answer generally turns on how the LLC is classified for federal tax purposes, which is separate from its status under state law.

LLC taxed as a partnership, all interests bought by one buyer. In Revenue Ruling 99-6, the IRS addressed a buyer purchasing all the interests in an LLC classified as a partnership. The partnership terminates, the sellers report the sale of partnership interests under section 741, and the buyer is treated as acquiring the former partnership’s assets by purchase, with a basis equal to the price paid.
Single-member LLC that is disregarded. Under the federal entity-classification regulations, a disregarded entity’s activities are treated in the same manner as a sole proprietorship, branch, or division of its owner (26 CFR 301.7701-2(a)). Tax practitioners commonly describe a buyer of all of a disregarded LLC as being treated, for federal income tax purposes, as purchasing its assets (Torys LLP).
Buying part of a multi-member LLC. When an interest in a partnership is transferred and the partnership continues, a partnership can elect under section 754 to make basis adjustments tied to transfers of partnership interests; the election covers both adjustment types and later years until revoked (26 CFR 1.754-1).
LLC that elected to be taxed as a corporation. Corporate tax rules generally apply instead, which is a separate subject this piece does not cover.

On the asset side, the IRS states that both buyer and seller file Form 8594, the Asset Acquisition Statement Under Section 1060, to report the sale of a group of assets that make up a trade or business when goodwill or going concern value attaches, or could attach, and the buyer’s basis is determined only by the amount paid (as of October 2026).

The EIN question follows the same classification logic. The IRS’s page on whether a new EIN is needed lists cases where an LLC generally needs one, such as terminating an existing LLC and forming a new corporation or partnership, and states that a partnership ownership change that does not terminate the partnership generally does not. That page does not address purchases of a business directly, so a tax professional is the usual source for a specific deal. Our guide on how to get an EIN covers the application itself.

Where financing fits

Many first-time buyers look at SBA 7(a) loans for an acquisition. The SBA’s lending rules for these programs are set out in SOP 50 10, and the version listed by the SBA as of October 2026 is 8.1 with technical updates, effective October 1, 2026 (SBA). Trade coverage reports that its change-of-ownership guidance now sits in Appendix 15 (Coleman Report). Whether a particular structure qualifies is a lender’s determination under the current SOP. Our breakdown of SBA 7(a) loan requirements and our look at why young builders are buying businesses instead of starting them cover the financing side in more depth.

The honest caveat

Neither structure is better in general. A membership interest purchase keeps a working entity intact, which can matter for contracts and licenses that are hard to transfer, and it carries the entity’s past with it. An asset purchase gives the parties more control over what moves, and it can mean re-papering contracts, permits, and accounts. Sellers and buyers often prefer different structures for tax reasons, so the final shape is commonly a negotiated outcome rather than a default. Small deals between people who already know the business well sometimes use simpler documents than this article implies; larger or more complex ones commonly involve an attorney and a tax professional on each side.

What this article can and can’t tell you

This is a general map of how LLC purchases are commonly structured and described in primary sources. It does not cover any particular state’s full transfer rules, corporate-taxed LLCs, securities law questions that can arise when interests are sold, or how a specific deal should be structured or taxed. Those depend on the documents, the state, and the people involved. More on how we approach these topics, and who we cover, is on our about page and in our founder profiles.

FAQ

Can you buy an LLC?

An existing LLC can generally change hands in one of two ways: a buyer purchases the owners' membership interests, so the entity itself continues under new ownership, or a buyer purchases some or all of the LLC's assets, often into a separate entity. Which route is available and how it works depends on the LLC's operating agreement, the state law that governs it, and what the buyer and sellers negotiate.

What is the difference between buying an LLC and buying its assets?

In a membership interest purchase, the LLC stays the same legal entity, so its contracts, licenses, history, and liabilities generally remain with it under new owners. In an asset purchase, specific assets move to the buyer and the selling LLC generally keeps everything not transferred. The two structures are often treated differently for federal tax purposes, and the details depend on the deal documents and state law.

Does buying a membership interest make the buyer a member of the LLC?

Not automatically in many states. Under Delaware's LLC Act, for example, an assigned interest by default carries economic rights such as a share of distributions, while becoming a member generally follows the operating agreement or, if it is silent, the consent of all members (6 Del. C. 18-702 and 18-704, as of October 2026). Other states set their own default rules.

How is buying an LLC taxed?

It generally depends on how the LLC is classified for federal tax purposes. In IRS Revenue Ruling 99-6, a buyer who purchases all interests in an LLC taxed as a partnership is treated as buying the partnership's assets. A single-member LLC that is disregarded has its activities treated like those of its owner. LLCs taxed as corporations follow corporate rules. A tax professional is the usual source for a specific deal.

Is IRS Form 8594 required when buying a business?

According to the IRS, Form 8594, the Asset Acquisition Statement Under Section 1060, is filed by both the buyer and the seller to report the sale of a group of assets that make up a trade or business when goodwill or going concern value attaches, or could attach, to those assets and the buyer's basis is determined only by the amount paid, as of October 2026.

Does an LLC need a new EIN after a change in ownership?

It depends on the LLC's tax classification and what the change does to it. The IRS lists cases where a new EIN is generally needed, such as terminating an LLC and forming a new corporation or partnership, and notes that a partnership ownership change that does not end the partnership generally does not require one. The IRS page on new EINs is the source to check, as of October 2026.