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Ask a Lawyer -- LLCs
LLC Question 153
Question:
Four months ago an associate and myself formed an LLC to open a pet treat & product business. We finally opened a retail store this month and she & I have agreed that I will be removing myself form this business on all levels immediately and she will remain as the only owner. We've invested only our own monies with the exception of two small loans from family members. What steps are needed to be taken to make this happen smoothly. I am taking with me the belongings I want and she is assuming all responsibility for the rest & all matters, interest, profit & debt related to the business. We will be signing an agreement stating this to simply get something in writing, but I need to know what formal legal actions need to be taken in NJ & with the IRS?
Response: First, please review a prior response on the issue of member withdrawal (disassociation) from an NJ LLC. The agreement you are entering into with the other member for withdrawal from the LLC is important. "She is assuming all responsibility for the rest & all matters". You obviously want to be held harmless from any future LLC debts. If the remaining member of the LLC is agreeing to do that for you, it is recommended you either have a lawyer draft or review the agreement on your behalf to ensure that the language accomplishes what you think has been agreed to.
What other action needs to be taken? One cannot really say for certain without reviewing all the documents you have signed in your capacity as an LLC member and all LLC filings with the state and federal government. Aside from government agencies, as a precaution, I'd notify every entity with which your LLC does business to notify them of your withdrawal. If you are the registered agent of the LLC, you shall need to withdraw and someone else replace you in that office. Other than that, I can't really think of something that needs to be filed with the State of New Jersey immediately. The next annual or quarterly report to each state agency should omit you as a member. Here is the contact page for NJ Division of Revenue (business services). Given them a call and ask if any document needs to filed by a withdrawing LLC member. As to the IRS, your accountant is the better source.
Submitted: 12/13/2007; Wendy, NJ
Response: 12/13/2007; JJR
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