LLC Operating Agreement, Pen, Glasses and Calculator on Desk

How To Remove a Business Partner From an LLC

Brazil Clark, PLLC Sept. 4, 2023

It’s common to start a new business with one or more partners to divide the workload and bring more minds on board to make your company a success. However, for a number of reasons, these partnerships may need to be dissolved. It’s essential that this be done the right way to protect everyone’s interests, including the long-term prosperity of your business.

If you’d like to sit down with a business litigation attorney and learn more about the requirements to remove a business partner, reach out to Brazil Clark, PLLC to schedule a consultation. Attorney Frank Brazil is located in Nashville, Tennessee, and can represent clients throughout Rutherford County and the rest of the state. 

Reasons for Removing a Business Partner From Your LLC 

There are several reasons why you may need to remove a business partner from your LLC, and not all of them stem from disputes. Regardless of the reason, you should always work with an experienced lawyer when addressing this to ensure it’s done correctly. Some potential causes of needing to remove a partner include: 

  • Partnership dispute: Disputes can and will happen over the course of your partnership. These could be related to operating procedures, how to tackle a certain problem, or what direction the business should take. In other cases, you may simply have a problematic business partner, and conflicts arise again and again. 

  • Retirement or death: If one partner is older and wishes to retire before the others, they may need to remove their name from the LLC. Similarly, if one partner passes away, you will need to take their name off all business records and LLC filings.  

  • Explore new options: In some cases, you may remain on good terms with your business partners but one of them wants to explore a new business venture or is moving out of state to pursue a different line of work.  

  • A violation of the partnership agreement: If one partner is not upholding their end of the agreement, whether it’s by not fully participating, not paying their dues, or if they’ve been in direct violation of your agreement, you’ll need to remove them from the LLC. 

How to Remove a Business Partner 

  1. Review the Articles of Organization: If your original LLC paperwork was thoroughly written, it should spell out the procedure for removing a business partner along with other policies, and these must be followed. If there are no rules laid out, then you may be able to remove them with a simple vote. 

  1. Written Notice of Withdrawal: The next most common step is for the partner who’s leaving to draw up a written notice of withdrawal. If the removal is mostly amicable, this may be fairly straightforward. On the other hand, if you’re forcing a partner out, you may wish to talk with a corporate litigation attorney. 

  1. Negotiate a buyout: In some cases, the remaining members may want or need to offer a buyout to encourage the partner to leave on good terms. 

  1. Judicial Dissolution: If the partner refuses to leave or accept a buyout and there is no language in your business agreement to force a member out, you may need to involve the courts. 

Possible Alternatives to Removal  

Often, removal is inevitable and the best solution for all involved. That said, you may wish to explore other options beforehand to see if a resolution is possible. If you can address a conflict in the beginning stages, you may be able to come to a compromise through discussion or even with the help of a licensed mediator. If possible, set up boundaries within the company with clearly delineated roles to help prevent future conflicts from arising.  

When Disputes Arise: How an Attorney Can Help 

You’ve chosen the LLC model to limit your personal liability from that of your business, but this is only effective if you follow the proper protocols and ensure the language of your contracts and any partner removals is legally binding. There is simply too much on the line to risk doing this yourself. An experienced business lawyer can give you peace of mind and practical legal advice at every stage of the process.

A skilled and experienced attorney can help with every aspect of your LLC, from drawing up the initial Articles of Incorporation to addressing conflicts among business partners to dissolving your business when it’s time.  

Practical & Purposeful Legal Advocacy 

If you’re a business owner in the Nashville, Tennessee area, you deserve to work with an attorney who’s just as committed to the growth and success of your company as you are. For help with any aspect of your LLC or to discuss your options for removing a partner, contact Brazil Clark, PLLC today. The firm is here to help you and your business move forward with confidence.