Leaving a business partnership is never easy—but sometimes, it’s necessary. Whether due to personal goals, disagreements, retirement, or financial reasons, you may be wondering:
“How do I get out of an LLC partnership?”
Exiting a Limited Liability Company (LLC) partnership involves more than just walking away. You need to follow the legal procedures to protect your interests, avoid disputes, and ensure the business continues (or closes) properly.
In this guide, we explain how to get out of an LLC partnership, step-by-step, the right way.
Can You Leave an LLC Partnership?
Yes, you can leave an LLC partnership—but the process depends on:
- What your Operating Agreement says
- The laws of your state
- Whether the exit is voluntary or forced
- Whether the LLC will continue without you or dissolve
If done improperly, leaving an LLC can result in legal trouble or financial liability.
Step-by-Step: How to Get Out of an LLC Partnership
Step 1: Review the Operating Agreement
Your LLC’s Operating Agreement is the rulebook for your exit. Look for:
- Withdrawal or resignation clauses
- Buyout procedures
- Valuation methods for ownership interest
- Required notice periods
- Approval or voting requirements from other members
If you don’t have an Operating Agreement, you’ll need to follow your state’s default LLC laws.
Step 2: Notify Other LLC Members in Writing
Send written notice to the other members of your intention to leave the LLC. This creates a legal record and allows them to prepare for your exit.
Include:
- Your intent to withdraw
- Proposed timeline
- Reference to the Operating Agreement (if applicable)
Step 3: Negotiate a Buyout (If Applicable)
Most LLCs will buy out your ownership interest based on:
- The terms in the Operating Agreement, or
- A mutual agreement between members, or
- A third-party business valuation
The buyout may be a lump sum or installment payments, depending on the LLC’s finances.
Step 4: Sign a Withdrawal or Exit Agreement
To finalize your exit, sign a formal agreement stating:
- Your voluntary withdrawal from the LLC
- The terms of your buyout or equity transfer
- That you waive future claims against the company
- That your name is removed from business records
Tip: Have an attorney draft or review this document to protect your rights.
Step 5: Amend LLC Documents
Once your exit is official, the remaining members should:
- Amend the Operating Agreement
- Update the Articles of Organization (if required in your state)
- Notify the IRS if you were the responsible party
- Update internal records and bank account authorizations
Step 6: File State Notifications (If Required)
Some states require formal filing with the Secretary of State when a member withdraws from an LLC. Check your local rules to see if a Statement of Withdrawal or Amended Articles is required.
Step 7: Update Taxes and Business Filings
Ensure that your name is removed from:
- Business tax accounts (federal and state)
- Sales tax or employer tax IDs
- Annual report filings
- UCC filings, if applicable
File a final Schedule K-1 for your share of profits/losses.
What If the Operating Agreement Doesn’t Allow Withdrawal?
If your LLC doesn’t allow withdrawal, or there is no clear agreement, you may have to:
- Negotiate a voluntary exit with the other partners
- File a lawsuit for judicial dissolution (last resort)
- Consider selling your interest to a third party (with approval)
State laws usually govern how members can withdraw when no agreement exists.
Can You Leave an LLC and Still Be Liable?
Yes—if the exit is not handled properly. You could remain liable for:
- Debts or legal claims that occurred before your exit
- Personal guarantees you signed
- Tax issues if your name is still on file
This is why a formal, documented exit is essential.
Final Thoughts
Getting out of an LLC partnership is a legal process—not just a personal decision. By following the right steps, you can:
- Exit smoothly
- Get fairly compensated
- Avoid future liability or disputes
Whether you’re leaving on good terms or in a dispute, always involve a legal advisor to ensure your interests are protected.
