Severna Park, MD asked in Business Formation, Business Law and Contracts for Maryland

Q: Can I force a partner out of a partnership LLC with no operations agreement, for not putting in enough time?

We are a cabinet manufacturer. We are attempting to be a women owned business that was created last year. We have not sold any work as of yet. We do have equipment we are paying for. The shop is located on my property, and everything is in my name. If I am not able to force them out, can I enforce a change in the percentage of the company she controls?

1 Lawyer Answer
Mark Oakley
Mark Oakley
  • Rockville, MD
  • Licensed in Maryland

A: You can withdraw from the company, boot it out of your home, and demand liquidation of the assets, and either pay your co-owner their fair share of the costs they expended on the equipment, or otherwise buy out out the equipment. Meantime, start a new LLC and begin cabinet making under a new business. It would be better to get them to sign an agreement terminating their interest in the LLC in exchange for whatever they paid into it which otherwise benefits you by keeping the business after the buyout. However, if they refuse to sell or agree to reasonable terms, you are under no obligation to work for or in the LLC you created with her, and are free to quit and open a new business. You are also not obligated to provide your home as the principal place of business of the LLC. Another way to address this is to work out a different compensation arrangement, as you mentioned, but it does not have to be based on changing ownership percentages. You could receive unequal distributions based on hours worked in the business, or however you agree. You could be paid a salary or wage, then split profits 50-50 above your salary and other overhead expenses.

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