Legal Question in Business Law in Washington

Re: S Corporation WA State

Check all of your various corporate documents. If you used an attorney when you formed the corporation, your documentation should describe exactly what you need to do. If it does not, then you will need to check the RCWs (the Washington State Law statutes) and see whether they dictate how to handle your situation. Alternatively, you can work out an agreed deal with the two friends who are leaving.

Re: S Corporation WA State

As the other attorney has mentioned, much depends on how the original formation documents read.

Since what you have is a corporation, transferring ownership is a matter of transferring stock, assuming the stockholder's agreement allows that.

If either or both of the friends leaving the business is also on the board of directors, you will need to observe proper corporate formalities to have them resign from the positions. If either or both are officers of the company, you will need to oberserve proper corporate formalities to change that as well.

You must also consider how to properly value the business in order to fairly buy out your friends' interests. You must also consider the tax implications of whatever method you decide upon.

Short answer to your two questions in reverse order:

There is a good chance you will be able to keep the business as is, but much depends on the details of your formation documents, your agreement with the other owners, the economic situation of your business, etc.

What you need to do to accomplish the change you desire depends on a long list of details about your business formation, present situation and future plans. There are too many possible answers depending on the details. In this case, if you do not want to turn the matter over to an attorney to handle (especially understandable if the business is very small), it would still be worth your time and money to purchase a few hours of any attorney's time to discuss your particular situation and learn where the pitfalls are in your case.