Template Tuesday: How to Contribute Non-Cash Assets to Your LLC

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1. Feature: Template Tuesday: How to Contribute Non-Cash Assets to Your LLC (4 min)

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Most people start their LLC with cash. It is simple to deposit money in a business bank account and record the contribution. Over time, however, many owners want to put other property into the company. It might be a truck, a set of tools, computers, intellectual property such as a trademark, or even, Bitcoin.

These contributions can be just as important as cash, but they require careful documentation.

This week’s template is a Bill of Sale and Capital Contribution Agreement. It provides a professional way to transfer non-cash assets from a member into the LLC. Using a clear document for these transfers keeps your records straight, protects your liability shield, and helps prevent future disputes.

Also, you may want to read our previous article: Transferring Highly Appreciated Assets Like Bitcoin and Art to a Sole-Member LLC.

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Why non-cash contributions matter

When you transfer property to your LLC, that property no longer belongs to you personally. It belongs to the company. That distinction is important if the LLC is sued or if creditors come calling. If you still appear to own the asset, it may be vulnerable to claims.

Consider the example of a small construction company where the owner uses a personal truck for both business and personal purposes. If the truck is not formally contributed to the LLC, there is an argument that it remains a personal asset. That weakens the separation between you and the company. On the other hand, if there is a signed Bill of Sale (backed up by the DMV title change) showing the truck is owned by the LLC, the record is clear. The company owns it, and you have maintained the legal wall that protects your personal assets.

Non-cash contributions also matter for ownership records. If your LLC ever admits a new member, you want it to be clear what you put in. Cash is easy to trace. Property is not.

Without a written record, you can face disputes about whether the contribution happened and what it was worth.

Why a Bill of Sale is useful

Cash contributions leave a paper trail in the form of bank deposits and accounting entries. Property contributions need something stronger. A Bill of Sale proves that the asset has moved from you personally to the LLC. It acts as the legal document that transfers ownership.

Our template includes the core language needed for that transfer. It states:

“The Member bargains, sells, assigns, and transfers to the Company, as of the above Effective Date, all rights, title, and ownership interest in and to the following property.”

That is a full legal transfer. It also addresses the accounting side of the contribution. The template makes clear that the agreed value is added to your capital account:

“The Property is transferred as a capital contribution. Its agreed value is $[AMOUNT], to be credited to the Member’s capital account per the Operating Agreement.”

With these two clauses, the transfer is clear both for ownership and for your books. Always check with your CPA for how to make sure your transfer value is reasonable and properly documented to keep the IRS satisfied. Truck values are easy; art is more complicated.

The as-is disclaimer

When transferring property into an LLC, especially in multi-member companies, it is important to manage expectations about conditions. The template includes a bold disclaimer that reads:

“IMPORTANT: THE ABOVE PROPERTY IS TRANSFERRED ‘AS-IS, WHERE-IS, WITH ALL FAULTS,’ AND WITHOUT ANY WARRANTY, EXPRESS OR IMPLIED, INCLUDING WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.”

This means that the company is accepting the property in its current state. If the equipment breaks down tomorrow, the company cannot later argue that you promised it would work perfectly. It is a clean transfer, free of misunderstandings. For single-member LLCs, the disclaimer may feel unnecessary, but it still makes sense to use it. It shows you are handling business assets with the same formality a larger company would.

What belongs in the description

The Bill of Sale is only as good as the description of the property it covers. Be specific. If it is a vehicle, include the make, model, and VIN. If it is equipment, include serial numbers. If it is intellectual property, describe the type and list registration or application numbers.

The template provides a space for this:

“[Include identifying details of each item: make, model, serial number, VIN, documents, intangible IP details, etc.]”

Vague descriptions create problems. If you write only “equipment,” you invite disputes later. A good description leaves no doubt.

Email [email protected] to get started.

How the company accepts the contribution

The Bill of Sale is not complete until the company accepts the contribution. The template includes a short but important clause:

“The Company accepts the Property as a capital contribution and will record it accordingly.”

That sentence closes the loop. It shows that the company received the property and will treat it as its own. Without it, there is an argument that the contribution was never formally recognized.

Accounting and tax considerations

When you contribute property, its agreed value is added to your capital account. That value sets the basis for your ownership. It does not mean you get an immediate deduction. Instead, the value becomes part of your investment in the company.

For high-value contributions, consider obtaining an appraisal. For everyday items, a reasonable market estimate may be enough. The important point is to agree on a value and write it down in the Bill of Sale.

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Signatures and governing law

The template requires signatures from both the member and the company. Even in a single-member LLC, it is wise to sign twice. You sign once as an individual and again as the company’s manager or managing member. That dual signature shows the asset truly moved from you to the business.

The agreement also includes a governing law clause. It provides certainty if disputes ever arise. Electronic signatures are valid and enforceable, which makes the process efficient.

Practical steps for owners

Use a Bill of Sale every time you transfer property into your LLC. Keep the document with your other company records. Update titles or registrations when necessary, especially for vehicles. Make sure the asset is listed in your books so your accountant can track depreciation or amortization.

Doing these things may seem like formalities, but they are the formalities that keep your LLC strong. They prove you are treating the company as a separate entity. That is the heart of liability protection.

Let’s get this done

Transferring non-cash assets to your LLC is not terribly difficult but involves more than moving them into the office. It is a legal act that needs to be clear. A Bill of Sale and Capital Contribution Agreement is the right tool. It proves ownership has passed, it records value in your capital account, and it shows the company accepted the asset.

Our new template gives you the precise language to make these transfers correctly. For single-member LLCs, it is a way to show you respect the separation between you and your business. For multi-member LLCs, it prevents disputes and protects everyone’s interest.

With one document, you create clarity, maintain protection, and keep your LLC operating on solid ground.

Have an interesting business question and need a free bit of advice? Send your question to [email protected]. No confidential info, please!