What is an LLC membership interest?

An LLC membership interest represents an owner's share of the LLC, including their right to receive profit distributions, their voting rights, and their share of the company's assets upon dissolution. Unlike corporate stock, membership interests are not standardized — their rights and restrictions are defined entirely by the operating agreement.

Membership interests can be divided into economic rights (right to receive distributions) and governance rights (right to vote, participate in management). An operating agreement can separate these — for example, allowing someone to receive profits without voting power (an 'assignee' rather than a full 'member'). Membership interests can be expressed as percentages (e.g., 60%/40%) or units (e.g., 600 units / 400 units). Units are preferred when you plan to issue additional interests to new members, as they avoid the need to recalculate everyone's percentage. Transfer of membership interests is typically restricted by the operating agreement and may require consent of other members.