An owner of an LLC is called a member. If you are a member of an LLC, there may come a time when you want to leave the company. State laws regarding LLCs are similar across the country, including those statutory provisions associated with withdrawing from an LLC. The primary document involved in withdrawing from an LLC is the operating agreement. The operating agreement is a contract between all LLC members that includes information about how the business is operated and the rights of members.
Review the most recent version of the operating agreement. The LLC operating agreement contains the specific process to be used to leave or withdraw from the LLC.
Read More: How do I Get Out of an LLC Partnership?
Prepare a written notification stating your desire to withdraw from ownership of the LLC. Cite the specific provision in the operation agreement governing withdrawal.
State specifically that, as part of the withdrawal, you require, demand or desire full payment for the value of your investment interest in the business. Determining this dollar amount may require an audit of the books of the LLC as well as an independent valuation of the enterprise. Experts provide these types of services, many specifically in regard to LLCs.
Deliver the written notification to all other LLC members.
Obtain or prepare an agreement outlining the manner in which you will withdraw from the LLC. The contract need not be complicated. Nonetheless, you may want to consider having it prepared by a lawyer. The agreement should include provisions regarding the timing of your withdrawal, the amount of compensation you will receive and how you will receive this compensation.
Request a vote of the LLC membership to approve your withdrawal from the business.
Receive payment, or other agreed compensation, for your interest in the LLC. At that juncture, the remaining LLC members will have you sign a release confirming that you received appropriate compensation for your interest in the business.
If the LLC experiences financial problems at the time of your proposed withdrawal, your interest in the company actually may be negative. Under the terms of some operating agreements, before you are permitted to sever your ties with the business, the other owners can require you to contribute to your share of the debt of the enterprise.
- "Your Limited Liability Company: An Operating Manual"; Anthony Mancuso; 2010
- "The Operations Manual for LLCs"; Michael Spadaccini; 2008
Mike Broemmel began writing in 1982. He is an author/lecturer with two novels on the market internationally, "The Shadow Cast" and "The Miller Moth." Broemmel served on the staff of the White House Office of Media Relations. He holds a Bachelor of Arts in journalism and political science from Benedictine College and a Juris Doctorate from Washburn University. He also attended Brunel University, London.