How to Remove a Member From an LLC in New York: A Complete Step-by-Step Guide

 

How to Remove a Member From an LLC in New York: A Complete Step-by-Step Guide

Removing a member from an LLC in New York can be a complex process depending on the company’s operating agreement, the reason for removal, and how ownership is structured. Whether a member wants to voluntarily leave or needs to be removed due to conflict, non-performance, or misconduct, New York law outlines specific rules that must be followed.

This guide explains exactly how to remove a member from a New York LLC, including the legal requirements, documentation, and steps needed to ensure a smooth and compliant transition.

Overview: Removing an LLC Member in New York

Removing an LLC member in New York depends on three key factors:

  1. What your operating agreement says

  2. Whether the member is voluntary or involuntary leaving

  3. Whether the LLC has one member or multiple members

Unlike corporations, LLCs have flexible rules—making the operating agreement the most important governing document.

1. Review Your New York LLC Operating Agreement

The operating agreement is the controlling document for membership changes.

Look for sections that address:

  • Member withdrawal

  • Member expulsion

  • Buyout procedures

  • Voting requirements

  • Valuation of membership interests

  • Replacement of members

Most well-drafted agreements include:

  • How members can resign

  • How and when they can be removed

  • What happens to their ownership interest

If your operating agreement includes removal provisions, follow those rules exactly.

2. If There Is No Operating Agreement

If your LLC does not have an operating agreement—or it does not address member removal—New York’s Limited Liability Company Law applies.

Under default state law:

  • Members cannot simply be “forced out” unless the agreement allows it.

  • Removing a member may require dissolving the LLC unless all remaining members agree to continue.

  • A court may need to order the removal if there is a serious breach of duty.

Important:
New York LLC law makes involuntary expulsion difficult without written procedures in place.

3. Hold a Vote (If Allowed)

If your operating agreement permits member removal, it will specify:

  • Required vote percentage

  • Quorum rules

  • Whether a meeting or written consent is needed

Common requirements include:

  • Majority vote

  • Supermajority vote (2/3 or more)

  • Unanimous consent from remaining members

Document the vote in:

  • Meeting minutes

  • Written consent form

  • Updated membership ledger

This documentation protects the LLC from future disputes.

4. Draft a Buyout or Withdrawal Agreement

Whether voluntary or involuntary, the departing member must have their ownership interest addressed.

The buyout agreement should include:

  • Value of the member’s ownership percentage

  • How the valuation was determined

  • Payment terms (lump sum or installments)

  • Effective date of withdrawal

  • Release of liability

  • Transfer of interests to the LLC or remaining members

Many New York LLCs use a fair market value appraisal or formula-based valuation.

5. Update Internal LLC Records

After a member is removed, update:

  • The membership list

  • The operating agreement (amended version)

  • Profit/loss allocations

  • Voting rights distribution

  • Capital account balances

These updates are essential for maintaining compliance.

6. Amend the Operating Agreement

New York does not require filing the operating agreement with the state, but you must internally amend it to reflect:

  • New ownership structure

  • Updated voting rules

  • Any new member rights or duties

This becomes the new governing document moving forward.

7. File Articles of Amendment If Necessary

New York does not require LLCs to file a state amendment solely because a member was removed.

However, you must file Articles of Amendment with the New York Department of State if the removed member was listed on:

  • The original Articles of Organization

  • A previous amendment

  • A published statement (rare cases)

Most LLCs do not list members publicly, so amendments are usually not necessary unless managers are named.

8. Update Tax Records and EIN Information

You may need to update:

  • IRS records (if ownership changes affect tax classification)

  • New York State Department of Taxation and Finance

  • Local tax agencies

  • Payroll and sales tax accounts (if the removed member was on file)

For multi-member LLCs:

  • Removal may change partnership tax filings

  • New K-1s may be required

For single-member LLCs:

  • Removing a member may convert the LLC to a single-member entity for tax purposes.

9. Notify Banks, Lenders, and Third Parties

Update or remove the departing member from:

  • Business bank accounts

  • Credit lines

  • Contracts

  • Vendor accounts

  • Lease agreements

Banks often require:

  • The updated operating agreement

  • Member removal documentation

  • Meeting minutes or written consent

Failing to update these records can cause legal and financial complications.

Voluntary vs. Involuntary Member Removal in New York

Voluntary Removal

When a member chooses to leave:

  • Follow withdrawal procedures in the operating agreement

  • Execute a buyout agreement

  • Update internal documents

This is usually the simplest scenario.

Involuntary Removal

Involuntary removal may happen due to:

  • Misconduct

  • Failure to perform duties

  • Financial disputes

  • Breach of the operating agreement

  • Illegal actions

  • Conflict with other members

New York law does not automatically allow forced removal.
You must rely on:

  • The operating agreement, or

  • A court order

Courts may remove a member if:

  • They harm the company

  • They breach fiduciary duties

  • Their behavior makes business impossible

This is a last resort when internal agreements do not permit expulsion.

Can You Remove a Member From a New York LLC Without Their Consent?

Only if:

  • The operating agreement explicitly allows it, or

  • A court orders their removal.

Otherwise, New York LLC law may require dissolution if members cannot agree.

Does New York Require Filing a Form to Remove a Member?

No.
There is no state form specifically for removing a member.

All changes are handled internally unless:

  • A manager listed in public filings changes, or

  • The LLC’s Articles of Organization included member information (rare)

Final Thoughts: How to Remove a Member From a New York LLC

Removing a member from a New York LLC involves several important steps:

  1. Review the operating agreement

  2. Follow voting and removal procedures

  3. Document the decision

  4. Execute a buyout agreement

  5. Update internal LLC records

  6. Amend the operating agreement

  7. Notify tax agencies, banks, and contracts

  8. File amendments only if required

The key factor is whether your operating agreement includes clear removal procedures—this determines whether the process will be simple or legally complex.

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