Q&A with Matt Hopkins
LLC closing requires paperwork
Q: If siblings own a business organized as a limited liability company and want to close it, do they need a written agreement?
A: Yes. Ending a business properly requires written documents. It is often tempting, especially when doing business with family or friends, to just shut the doors, pay the bills, divide up the stuff and move on down the road. Resist the temptation. When you close the door on this chapter of your business life, make sure the door is completely shut before turning your back. Otherwise, unresolved, lingering issues may surprise you when you least expect.
Hopefully, your limited liability company has a written operating agreement. The operating agreement, usually adopted when the company is formed, should set out important provisions regarding how the company and its members are to treat each other. The operating agreement usually will determine the documents that are needed to properly dissolve the company and wind up its business. In most cases, members of the company will need to vote to dissolve the company, but some operating agreements provide for other ways to shut the company down. It is important to prepare documents that show the terms of the operating agreement were either followed or properly waived.