This is the third email in a series on the four possible elements of an LLC.  My video at right explains the concept of transferabilty, which is the third element we will discuss.

More information is available in my video at the right and on my blog at www.llcwizard.com/transferability/, but you should know that transferability refers to the ability to sell ownership shares in your company.  These are referred to as stock in a corporation and membership interests in an LLC.

While it is possible to trade membership interests in an LLC, most LLCs are mom and pop operations that wouldn't really benefit.  As a matter of fact, they usually wouldn't want to have transferability of their membership interests because not letting those interests transfer offers some legitimate asset protection in case of a lawsuit. Suppose a creditor sues you and wants to get their money by dismantling your company.  Certain language in operating agreements has been used by the courts to prevent someone from coming in and taking over the LLC when one of the members gets in financial or legal trouble personally.  That 's a protection worth having.