If you need to remove a member from your New Jersey LLC, you may need to amend your articles and operating agreement. Here’s what you should know.
Can I remove a member from my NJ LLC?
Yes. There are several reasons why an LLC member may be removed, including retirement, internal disputes, wrongful conduct, or death. If you need to remove a member from your LLC, follow your operating agreement’s procedure for removing a member. While your process may look different depending on the rules established in your operating agreement, removing a member typically involves the following steps:
- Hold a meeting of all LLC members
- Raise the action of removing the member
- Hold a vote
- Adopt a resolution to remove the member (if approved by the majority of votes)
Learn more about Changing LLC Membership Information in New Jersey.
Do I need to file a New Jersey Certificate of Amendment when I remove an LLC member?
Not typically. You are only required to file a New Jersey Certificate of Amendment if information listed in your New Jersey Articles of Organization (also called a certificate of formation) changes. Since New Jersey doesn’t require LLCs to list member information in their articles of organization, you will probably not need to submit a certificate of amendment. However, if you chose to list your members’ names in your articles, you will need to file a NJ Certificate of Amendment and pay the $100 fee.
Do I need to update my NJ operating agreement?
Yes. Operating agreements include the names and addresses of LLC members, so whenever you add or remove a member, you will need to update your operating agreement.
Do I need to tell my bank that a member was removed from my New Jersey LLC?
Yes. Your bank most likely keeps a record of the members of your LLC, so you will need to inform them when you have removed a member. Depending on the bank’s policies, they may ask to see documentation proving that a member has been formally removed from your LLC. If you filed a certificate of amendment, the NJ Division of Revenue will send you a certificate showing that your amendment was processed, which most banks will accept as proof. However, some banks may ask to see a certified copy of your articles of organization. You can request a certified copy of your New Jersey Articles of Organization from the Division of Revenue. The total state fee is $30.10.
Find out more about obtaining a New Jersey Certified Copy of Articles of Organization.
Do I contact the IRS if my LLC loses a member?
It depends. When you apply for an Employer Identification Number (EIN) from the IRS, you must list the contact information of the Responsible Party within your LLC. So if you listed the member you’re removing as your Responsible Party, you will need to update this information by filing IRS Form 8822-B.
Otherwise, you will not need to inform the IRS that your LLC has removed a member, unless your LLC will now be structured differently for tax reasons. For example, a multi-member LLC that is taxed as a partnership could become a single-member LLC taxed as a disregarded entity. If you wish to change how your LLC is classified for tax purposes, you’ll need to complete IRS Form 8832.