How to Withdraw From an LLC

By Anna Assad

A limited liability company, or LLC, is a business that is not a corporation but still shields the owners from personal liability for the LLC's debts and legal obligations. The owners of an LLC are typically active in the business's management and daily operations, and the structure of an LLC is usually a mix of a corporation and a legal partnership. Withdrawing from an LLC you are a part of may be necessary if you cannot or do not want to participate in the company any longer.

Step 1

Check the original articles of agreement and bylaws for the LLC. The procedure for withdrawing should be stipulated in the LLC documents. Laws vary by state, but you are typically required to give prior written notice to the other members of the LLC, such as six months before you withdraw.

Step 2

Calculate how much you will be paid for your interest if the withdrawal procedure calls for such a purchase. Use the amounts and directions set forth in the LLC agreement to determine the amount you will receive. Review the amount carefully; the amount you are paid may be substantially less than your interest is worth. Do not withdraw if you cannot afford the loss.

Ready to start your LLC? Start an LLC Online Now

Step 3

Review the financial state of the LLC. Some states do not absolve you of financially responsibility for the LLC if your interest payment upon withdrawal renders the company unable to pay expenses. Compare the LLC's cash-flow and financial situation to the amount you would be paid for your interest upon withdrawal.

Step 4

Draft your notice to withdraw in accordance with your state laws and LLC articles and bylaws. Deliver the notice to all members of the LLC. Obtain proof of receipt from each member for your records.

Step 5

Schedule a meeting with the other members of the LLC if the agreement prohibits your from withdrawing. Ask if you may sell your interest in the LLC. You may be able to sell your interest in the LLC entirely to another member or person, but the final approval may have to come from the other LLC members.

Step 6

Check the rules regarding filing a notice of withdrawal with your state's LLC, business or corporations department. You may not need to file the notice with your state if the LLC is still going to be operational after your withdrawal.

Ready to start your LLC? Start an LLC Online Now
How to Buy a Membership Interest in an Existing LLC


Related articles

Consequences of Breaking an LLC Operating Agreement

The members, or owners, of a limited liability company are bound by the rules and provisions of the company's operating agreement. The agreement usually details the LLC's internal procedures, like the policies for distribution to and funding from members, and also any penalties for members who break the agreement.

How do I Remove LLC Board Members?

A limited liability company, or LLC, is a form of business organization that provides the benefits of pass-through federal taxation, limited liability and relaxed filing requirements. Unlike a corporation, the owners, or members, of an LLC do not need to appoint a board of directors. However, larger LLCs frequently appoint managers -- who do not have an ownership stake in the LLC -- to a board of directors to manage day-to-day operations. While the procedure varies among states, removing a board member from an LLC requires a vote by LLC members.

Who Does a LLC Have to Show Financials To?

Keeping accurate accounting records is part of your responsibility as an owner of a limited liability company. Using the data from your company's books, you can generate financial reports to gauge the health of the business. Most entrepreneurs wouldn't want competitors or other outsiders to have access to this proprietary information about their businesses; however, certain parties have a right to see your LLC's books and related financial records upon request.

LLCs, Corporations, Patents, Attorney Help

Related articles

How do I Get Out of an LLC Partnership?

A limited liability company, or LLC, is a form of business entity created by state LLC statutes. An LLC combines the ...

How to Buy a Partner's Shares of LLC

A limited liability company, or LLC, can function like a partnership. The partners, known as members, must agree ...

How to Add a Nonvoting Investor to an LLC

Adding a nonvoting member to your limited liability company may be an opportunity to bring in more investors while ...

How to Transfer My Interest in an LLC

All owners, or members, of a limited liability company have a percentage of ownership of the business, referred to as ...

Browse by category
Ready to Begin? GET STARTED