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?
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.
Justia Ask a Lawyer is a forum for consumers to get answers to basic legal questions. Any information sent through Justia Ask a Lawyer is not secure and is done so on a non-confidential basis only.
The use of this website to ask questions or receive answers does not create an attorney–client relationship between you and Justia, or between you and any attorney who receives your information or responds to your questions, nor is it intended to create such a relationship. Additionally, no responses on this forum constitute legal advice, which must be tailored to the specific circumstances of each case. You should not act upon information provided in Justia Ask a Lawyer without seeking professional counsel from an attorney admitted or authorized to practice in your jurisdiction. Justia assumes no responsibility to any person who relies on information contained on or received through this site and disclaims all liability in respect to such information.
Justia cannot guarantee that the information on this website (including any legal information provided by an attorney through this service) is accurate, complete, or up-to-date. While we intend to make every attempt to keep the information on this site current, the owners of and contributors to this site make no claims, promises or guarantees about the accuracy, completeness or adequacy of the information contained in or linked to from this site.