Whether it’s due to inactivity, disputes, misconduct, or voluntary withdrawal, there may come a time when your LLC needs to remove a member.
But removing someone from a Limited Liability Company (LLC) is a legal process that must be handled correctly to avoid lawsuits, liability, or IRS complications.
This guide explains how to remove a member from an LLC the right way—legally, efficiently, and in line with your company’s agreements and state laws.
Can You Remove a Member from an LLC?
Yes—but only under certain conditions.
You must:
- Follow the rules in your Operating Agreement
- Comply with your state’s LLC laws
- Document the removal properly
- Handle any buyout or ownership transfer
You can’t just “kick someone out” of an LLC without cause or due process—unless they voluntarily agree to leave.
Step-by-Step: How to Remove a Member from an LLC
Step 1: Review the LLC Operating Agreement
Your Operating Agreement is the first place to check. It may include:
- Grounds for removal (e.g., inactivity, breach of duty, misconduct)
- Voting procedures (majority or unanimous vote)
- Member buyout or withdrawal clauses
- Valuation method for ownership interest
- Required notice periods
If the Operating Agreement outlines a removal process, follow it exactly.
If your LLC has no Operating Agreement, you must follow your state’s default laws.
Step 2: Hold a Member Vote or Meeting
Most LLC Operating Agreements require a vote of remaining members to remove someone.
- Document the vote in meeting minutes
- Prepare a written resolution outlining the decision
- Ensure all members (including the one being removed) are notified
If the vote passes, the removal can proceed according to the agreed terms.
Step 3: Draft a Member Removal Agreement
This agreement formalizes the removal and outlines:
- The effective date of removal
- Buyout amount and payment terms
- Waiver of future claims
- Release of management roles (if applicable)
Both parties should sign the agreement. It may also require notarization in some states.
Step 4: Transfer or Buy Out the Member’s Ownership
You can’t remove someone from an LLC without compensating them for their ownership interest (unless agreed otherwise or ordered by court).
Options include:
- A lump-sum buyout
- Installment payments
- Transfer of interest to another member or third party
Valuation is typically based on:
- The Operating Agreement
- A third-party appraisal
- Book value or agreed-upon terms
Step 5: Amend the Operating Agreement and Ownership Records
Once the member is officially removed:
- Amend the Operating Agreement to reflect new ownership
- Update the capital contributions and voting percentages
- Remove the member from any management provisions (if manager-managed)
Step 6: File Changes with the State (If Required)
Some states require an amendment to your LLC’s public record.
Check with your Secretary of State and, if needed:
- File an Amended Articles of Organization, or
- Submit a Change of Member or Manager form
Fees and forms vary by state.
Step 7: Update Tax and Legal Documents
You may also need to:
- Notify the IRS if the responsible party is changing (Form 8822-B)
- Remove the member from business bank accounts
- Update your accountant and financial software
- Reflect changes in K-1 forms and tax filings
What If the Member Refuses to Leave?
If the member doesn’t agree to exit:
- Review your Operating Agreement for forced removal procedures
- Attempt mediation or arbitration
- As a last resort, file a lawsuit for judicial removal or dissolution
States like Delaware, Texas, and California have provisions for involuntary removal, but courts only grant it in serious cases (fraud, breach of duty, etc.).
Can You Remove a Member From a Single-Member LLC?
No—because there’s only one member. However, if you’re planning to add or change ownership:
- File an Amendment to add new members
- Then resign or transfer ownership to the new party
Mistakes to Avoid
- Failing to follow your Operating Agreement
- Removing a member without a written agreement
- Ignoring buyout or compensation requirements
- Not updating state and tax records
- Making verbal agreements without documentation
Final Thoughts
Removing a member from an LLC is a delicate process—but it’s entirely possible with the right legal documents, proper voting, and fair buyout terms.
Whether the removal is mutual or contested, always protect your business by documenting every step, following your Operating Agreement, and staying compliant with state laws.
