Multi-member specific clauses
- Member identification with ownership percentages
- Capital contribution schedule per member (initial and called capital)
- Profit and loss allocation (pro rata default; special allocations require substantial economic effect under IRC Section 704(b))
- Distribution waterfalls and timing (per ownership or per agreement)
- Voting rights and decision thresholds (majority for routine, supermajority for major decisions, unanimous for fundamental changes)
- Member transfer restrictions (prevents free transfer that could defeat LLC purpose)
- Right of first refusal (existing members can buy before outside sale)
- Drag-along (forces minority to sell if majority sells)
- Tag-along (minority can join majority sale)
- Member admission procedures (unanimous consent typical)
- Member withdrawal procedures and consequences
- Buy-sell on death (estate buyout)
- Buy-sell on disability
- Buy-sell on divorce (community property concerns)
- Dispute resolution (arbitration vs litigation)
- Management structure (member-managed or manager-managed)
- Manager appointment, removal, compensation (if manager-managed)
Tax treatment for multi-member
Multi-member LLCs default to partnership tax treatment (Treas. Reg. 301.7701-3). The LLC files Form 1065 annually and issues Schedule K-1 to each member. Capital account maintenance under IRC Section 704(b) requires substantial economic effect for special allocations to be respected. Form 5472 may still apply for related-party transactions involving non-US members.