Removing a Member from a Wisconsin LLC
Q: I registered an LLC as a 2-person partnership earlier this year, but now it’ll just be one member. What do we need to do with the LLC registration, notifying the state, etc.?
Thank you to a client from Wisconsin for that great question! You do not need to notify the state if you’re removing a member and only need to amend your LLC operating agreement. You’ll also need to contact the IRS if the person leaving the LLC is the responsible party to the IRS and your entity classification has changed. Let’s go through each step.
1. Amend your Wisconsin LLC operating agreement
Since Wisconsin does not require you to list your LLC members on your Articles of Organization, you’ll only need to amend your Wisconsin operating agreement regarding the membership change. In most cases, you need to get majority member approval to amend your operating agreement. You may also have outlined in your operating agreement another way to handle amending your internal documents.
The process to amend an operating agreement involves holding a meeting of members who vote on the resolution to remove the member. With only two members, the remaining member is the only one who needs to approve the resolution.
Learn more about amending your LLC operating agreement.
Do I file Articles of Amendment with the state of Wisconsin?
No. Wisconsin doesn’t require you to list your members with the state or on your Articles of Organization, so there is no need to send in Articles of Amendment.
2. Create a Wisconsin SMLLC operating agreement
Now that the LLC only has one member, it is considered a single-member LLC or SMLLC. While the LLC can keep the original operating agreement on file, there is an option of crafting a single-member operating agreement.
In the new operating agreement, the remaining member can write out things like the new capital contributions, management structure, compensation, and any changes needed to operating policies around transfers, dissolution, and hiring practices.
Curious on other aspects of SMLLCs? Check out our single-member LLC guide.
3. Contact the IRS
You’ll need to update the IRS if your LLC changes from a multi-member to a single-member LLC. Single-member LLCs are taxed differently than multi-member LLCs and need to file Form 8832 to update their entity classification. If the member who is leaving the LLC was your responsible party with the IRS, you’ll also need to file Form 8822-B to change your responsible party.
