Legal Question in Business Law in New York

Hi, I am 50% partner of an LLC and the other member wants to leave and be bought out. We filed the business in NY. It's an online design services company. The company is 6 months old and we have not generated any business income yet. So far we only have business expenses to start the company: articles of organization fees, domain, website, online and print marketing, business phone app to name a few. We paid our business expenses from our own pockets: we transfer funds to our business account from our personal account. Is the other member entitled to get her money back once she leaves? I presume that since we both bootstrapped the startup costs, we forfeit the money we have already put in (ex. website costs, articles of organization, marketing tools). How can the other member leave and be written off the LLC? Do I buyout the startup costs that the member put in? What can the company offer the member who is leaving? Thank you.


Asked on 12/21/14, 4:57 am

4 Answers from Attorneys

kevin connolly Kevin J. Connolly

What do your articles of organization say about this? The company does not have assets or profits to share, so unless you agreed otherwise she is entitled to nothing. Bupkes, Garnichts.

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Answered on 12/21/14, 7:14 am
SHAHRIAR KASHANIAN LAW OFFICES OF SHAHRIAR KASHANIAN, ESQ.,

I agree with Mr. Connolly. One more idea if you do not want to burn bridges and have a special relationship with the partner who wants out: you may offer him partial payment for any profits generated within a reasonable time hereinafter; for instance, one or maximum two years. He really does not have a reasonable way out.

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Answered on 12/21/14, 12:14 pm
Roman Fichman Esq. Law Practice of Roman Fichman Esq.

This is a fairly easy and straightforward matter. Though you should consider using an attorney because there could be future tax and liability issues if not done correctly. You should also complete the buy out or dissolution before the end of the year to avoid having to file taxes for the LLC for 2015 as well.

Because this is a fairly straightforward matter the cost of an attorney is not going to be high. Please ping me offline for further help.


Roman R. Fichman, Esq.

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Answered on 12/22/14, 7:54 am
Frank Natoli Natoli-Legal, LLC

The other member is not entitled to anything based solely on the facts presented. It might be in your best interest to buy her our at some price pegged to the initial investment otherwise she can hang on and not do anything then later claim profits as the business moves forward and assuming it is successful. You will need to create an LLC Membership Interest Transfer Agreement and consider some other aspects like for example, whose SS number supports the EIN? Amending the business bank account, etc.

I would probably not do this without consulting a lawyer in private just to make sure you are handling everything correctly and protecting your interests moving forward.

If you would like to discuss further over a free phone consult, feel free to contact me anytime that is convenient.

Our firm is now referred by the American Bar Association (see under the New York section):

http://www.americanbar.org/groups/delivery_legal_services/resources/programs_to_help_those_with_moderate_income.html

Kind regards,

Frank

www.LanternLegal.com

866-871-8655

[email protected]

DISCLAIMER: this is not intended to be specific legal advice and should not be relied upon as such. No attorney-client relationship is formed on the basis of this posting.

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Answered on 12/22/14, 10:51 am


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