Frequently Asked Questions (FAQ)

How do you transfer ownership of a sole proprietorship?
Technically speaking, there is no legal method for selling a sole proprietorship. Its ownership structure means certain aspects are non-transferrable, such as the business’s legal name, its debts, and other liabilities. However, you can change the ownership of the business assets.

After you separate the debts and other items that will stay yours, you can transfer the DBA name, contracts, and property to the new owner. After you transfer business ownership, the company dissolves, and the new owner restructures the assets according to the new company.

How is ownership transferred in an LLC?
You should handle the transferring ownership of an LLC in keeping with its buy-sell provision in the operating agreement. Every member of the LLC who wants to leave the company should sell their share and create a new Certificate of Amendment and operating agreement, updating member names.
Can an LLC own another LLC?
An LLC is permitted to be an owner of another LLC. LLC owners are called “members.” LLC law does not put many limits on who may be an LLC member. LLC members can be business entities, including corporations, individuals, or other LLCs. It is also permissible to form a single-member LLC, where the only owner is another LLC.
How do you change ownership of a business?
After you have transferred ownership, you should ensure the ownership is properly changed and legal, this process may include examining your change of ownership letter. It should be in keeping with the appropriate transfer of business ownership agreement(s). This structure can differ according to business structure, so consulting with lawyers is advisable.
How to transfer ownership of a small family business?
You may give cash gifts to individual family members of as much as $15,000 per year without paying gift taxes. You may also leave the business to a family member in your succession plan or your will.

The Next Step

The kind of business entity you have established and the transfer structure determines the steps you should follow. With an appropriate team of advisors and a succession plan, you can pave the way to success. 

Once you have learned how to transfer business ownership, you may be looking for new opportunities and wish to expand your horizons by purchasing an existing business or franchise. You may even have your eye on buying a failing business. A business acquisition loan can help you fund your vision. The amount of money you can borrow and the qualifications you need to get a business acquisition loan vary by lender.    

Fundera is the recommended lender for business acquisition loans because companies can take a loan and pay it back before its scheduled term, meaning you may get the lowest rates on the market. 

Fundera by Nerdwallet

About the Authors

Rebecca Beris

Written by: Rebecca Beris

Financial Content Writer and Editor

Rebecca has been working as a content writer and editor for over 12 years. During this time she has written content for various fields including, lifestyle, blogs, software technical writing, finance industry, and visual arts. She has been writing for companies in the areas of forex, crypto, banking, fintech, and fund...

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