Withdrawal from LLC

By: Martin M. Shenkman, CPA, MBA, JD

If you are a member of an LLC you can withdraw as a member. If the governing legal document (operating agreement) addresses this issue you have to comply with its terms and it may also dictate what you can get paid, when you can withdraw, and more. If there is no operating agreement, or it doesn't address this, the state law governing the LLC (limited liability company) (which may or not be the state you live in) provisions will set forth the steps you have to take to withdraw and what you are entitled to receive. In any case, you and the other LLC members are always able to negotiate a different deal if you wish. Withdrawals from an LLC can also be used to refer to distributions of cash or property from the LLC, not your withdrawal as a member of the LLC. Your right to distributions is governed by the operating agreement, or if none state law. Many operating agreements grant the manager (person in charge of LLC operations) discretion concerning distributions.

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