Running a business with partners can be rewarding—but sometimes, things change. Whether due to disputes, retirement, lack of participation, or a breach of duty, you might reach a point where you ask:
“How do you remove a partner from an LLC?”
Removing a partner (also called a member) from a Limited Liability Company (LLC) can be a sensitive and legally complex process. It requires careful handling to avoid lawsuits, tax issues, or breaking state laws.
In this article, we’ll walk you through the legal steps, requirements, and best practices for removing an LLC partner.
Can You Remove a Partner From an LLC?
Yes, a partner can be removed from an LLC—if allowed by your Operating Agreement or state law.
However, you can’t just remove someone unilaterally. The process depends on:
- The terms of the Operating Agreement
- The laws in your state of formation
- Whether the partner agrees to leave voluntarily or not
Step-by-Step: How to Remove a Partner From an LLC
Step 1: Review the Operating Agreement
This is the first and most important step.
A well-drafted Operating Agreement should outline:
- Grounds for removal
- Voting procedures
- Buyout terms
- Valuation of ownership interest
- Dispute resolution process
If there is no Operating Agreement, you must follow default state LLC laws, which vary by state and are usually more rigid.
Step 2: Vote on the Removal (If Allowed)
Most LLCs require a majority or unanimous vote to remove a member. This is usually documented in the Operating Agreement.
- Document the vote in meeting minutes
- Make sure notice of the meeting was properly given
- Use formal written consent or resolution
Step 3: Buy Out the Member’s Interest
Unless the member is being removed for cause (e.g. misconduct or breach), they are generally entitled to compensation.
- Hire a business appraiser if needed
- Use a Buy-Sell Agreement if you have one
- Pay the agreed value or terms to finalize the buyout
Step 4: Amend the LLC Documents
Once the member is removed and bought out, update the LLC’s records:
- Amend the Operating Agreement
- Update the Articles of Organization (if required by your state)
- Notify the IRS (if the member held a tax reporting role)
- File updated ownership documents with the Secretary of State
Step 5: Notify Banks, Vendors, and Authorities
Be sure to update:
- Bank account authorizations
- Business licenses and permits
- Contracts or service agreements
- Internal accounting systems
Can You Remove a Partner Without Consent?
Only in limited cases. You may be able to remove a partner without their consent if:
- The Operating Agreement explicitly allows it
- The partner breached fiduciary duties or broke the law
- You go to court and receive a judicial expulsion under your state’s LLC laws
This process can be expensive and time-consuming, so it’s best to resolve issues amicably when possible.
What If There Is No Operating Agreement?
If your LLC has no Operating Agreement, your options are limited to what your state law allows. In most states:
- All members must agree on any major decisions
- You may need to dissolve and reform the LLC to remove a member
- A court may need to intervene
Tip: This is why every LLC should have an Operating Agreement, even if it’s a single-member or family business.
Final Thoughts
So, how do you remove a partner from an LLC?
Start with your Operating Agreement. If it allows removal, follow the proper procedures. If not, consider a voluntary exit or court petition. Always consult with an attorney to ensure your actions are legally valid and protect your LLC.
