Q: I formed an LLC with my partner in Florida, and now I want to remove my partner and own the LLC completely by myself. What steps will be needed to get this done?
Thank you to a customer from Florida for that great question! You may need to remove a member from your LLC for many reasons, including when a member retires, engages in wrongful conduct, or has a major disagreement with the other members. When removing a member from a Florida LLC, you’ll need to amend your operating agreement and Articles of Organization. We’ll tell you the steps you should take.
1. Amend Your Florida LLC Operating Agreement
Your Florida operating agreement should include the names and addresses of your members, so you will need to amend it any time your LLC membership changes. First, you must get the approval of a majority of LLC members to make an amendment. Your operating agreement should include a policy for how it can be amended. Generally, the process will look like this:
1. Draft a resolution to remove a member
2. Hold a meeting of all members
3. Vote on the resolution
4. Pass the resolution (if the majority vote in favor)
If there are only two members of the LLC, the member with the larger membership stake will have decision-making power, unless the operating agreement states otherwise. For example, if one member has 51% membership interest and the other member has 49%, the member with 51% membership interest will typically have decision-making power in the LLC.
In Florida, leaving an LLC is known as “dissociation” and can include both voluntary withdrawal or involuntary removal. FL Stat § 605.0602 (2021) and FL Stat § 605.0603 (2021) go over events that cause can legally cause dissociation and the effects of dissociation.
2. File Florida Articles of Amendment
Then, you’ll need to file Articles of Amendment with the Florida Department of State, Division of Corporations. The filing fee is $25. Unlike most business documents for Florida LLCs, Articles of Amendment cannot be submitted online. Instead, you must submit this form by mail or in person.
By mail:
Registration Section
Division of Corporations
P.O. Box 6327
Tallahassee, FL 32314
In person:
Registration Section
Division of Corporations
The Centre of Tallahassee
2415 N. Monroe Street, Suite 810
Tallahassee, FL 32303
3. Contact the IRS
In some cases, you will need to contact the IRS when you remove an LLC member, including if the member who is leaving your LLC was listed as your Responsible Party with the IRS. In that case, you’ll need to file Form 8822-B to change your Responsible Party.
You will also need to contact the IRS if your LLC is changing from a multi-member LLC into a single-member LLC. That’s because single-member LLCs and multi-member LLCs have different tax classifications with the IRS. Single-member LLCs are taxed as “disregarded entities” by default, whereas multi-member LLCs are taxed as partnerships. To change your entity classification, file Form 8832.