Removing a member from a New York LLC is usually a straightforward process. Here’s what you should know.
Can I remove a member from my NY LLC?
Yes. It is common for LLC membership to change over time. Reasons why an LLC member may be removed include retirement, disagreements between members, wrongful conduct, or death. When removing a member from your LLC, the first step is to consult your operating agreement. Your operating agreement should include a policy for how a member can be removed. While different LLCs may have different procedures, in most cases, removing an LLC member includes the following steps:
- Holding a meeting of all LLC members
- Raising an action (to remove a member)
- Voting
- Adopting a resolution to remove the member (if approved by a majority of votes)
Do I need to file a New York Certificate of Amendment when I remove an LLC member?
Not usually. You aren’t required to include member information on the New York Articles of Organization, so unless you voluntarily included member information on this document, you don’t need to file a Certificate of Amendment to amend your articles.
Should I update my NY LLC operating agreement?
Yes. A New York operating agreement is much more detailed than the articles of organization and does include members’ names and addresses. So you will need to update your operating agreement to show that the member has been removed.
Do I contact the IRS if my LLC loses a member?
Sometimes. If your LLC will now be structured differently for tax purposes (for example, if it was formerly a multi-member LLC taxed as a partnership and will now be a single member LLC taxed as a disregarded entity) you’ll need to change your entity classification by filing IRS form 8832.
Also, if the member you’re removing was listed with the IRS as the “responsible party” for your LLC, you will need to submit Form 8822-B to name a new responsible party.