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How to Remove Yourself from an LLC in Texas? (Guideline)

Max Smith

Reading Time: 6 minutes

Are you seeking an answer to the question, “How to remove yourself from an LLC in Texas?” Removing oneself from an LLC in Texas can be one of two kinds: a voluntary departure or an involuntary removal.

As a member of a Texas LLC, you might have one or several reasons for removing yourself from it. But what are those reasons?

In this article, you will find directives for removing yourself or a member from your LLC and the reasons for doing so. 

Let’s find out!

Here is a list of a few probable causes that might make you want to remove yourself as an LLC member:

  • You want to pursue other opportunities.
  • Health or family issues.
  • Some conflicts have arisen between you and other members.
  • Financial issues can cause you to remove yourself.
  • You want to protect your personal assets because legal liabilities are risky.
  • Removing yourself is part of the process because your LLC is getting dissolved.
  • Retirement
  • Transferring your share.
  • Need personal growth.
  • The LLC business is not meeting your expectations.

So, you might have reasons to remove yourself from your LLC, but how will you do it legally? Find out in the next section.

How to Remove Yourself from an LLC in Texas?

Here are the steps you need to follow to remove yourself from an LLC in Texas.

  • Review the Operating Agreement

Start by reviewing the LLC’s operating agreement. The agreement should contain instructions for members who intend to leave the LLC.

  • Notify Other Members

You should inform the other members about your decision to leave the LLC.

  • Arrange to Vote

Approval from other members might be essential. So, arrange a formal vote or obtain written consent from them.

  • Draft a Resignation Letter

You will need to prepare a draft of your resignation letter. Expressively state your intention to resign as an LLC member. Also, include details like:

  • Your name,
  • The LLC name,
  • The effective Date of resignation, 
  • Reasons for resignation.
  • File a Resignation with the State

Not always, but sometimes you must notify the Texas Secretary of State of your LLC withdrawal. If you are the registered agent for the LLC, you will have to file a Change of Registered Agent form with the state.

  • Settle Financial Obligations

Financial obligations, such as debts or liabilities, may remain. If so, settle those as the agreement instructs, such as transferring ownership of assets.

  • Update Records and Accounts

When you update the accounts and records, you must notify a few parties, such as banks, creditors, vendors, and unique customers.

  • Finalize Documentation

Before finalizing documentation:

  • Close out all the affairs that tie you to the LLC.
  • Keep copies for your records.
  • Make sure that all involved parties receive the necessary documents on time.

Furthermore, do you want to remove a member from the LLC? Then, you must follow formal steps. Let’s learn how to do it, too.

How to Remove Member from LLC Texas?

Here are the steps to remove members from a Texas LLC.

  • Review the Operating Agreement

The LLC’s operating agreement should have an outline for member removal. Review and then follow the steps outlined in the operating agreement.

  • Vote or Consent

A vote or consent should be obtained per the operating agreement’s guide. You might need a specific percentage of members’ consent.

  • Provide Notice

After getting consent from the remaining members, notify them about the removal. If the agreement states otherwise, the member should be able to respond or contest the removal.

  • Document the Decision

You will need to keep records of all the documents concerning the removal. For example:

  • The Date of the decision
  • Details of the meeting that held the vote
  • The reason for the removal
  • A copy of the notice
  • The Date of sending the notice

Also, keep records of all the communication regarding the removal.

  • Update Membership Records

Records must be updated when there is any change in the LLC membership. For this, you might need to update the following:

  • The Operating Agreement
  • Membership ledger
  • Management instructions

You should also update any documents that reflect the LLC’s membership status.

  • Distribute Assets

The removed member might have ownership interests in the LLC, like assets or financial investments. Properly distribute them following the operating agreement.

  • File the Necessary Forms

In typical situations, you do not need to file any particular form with the Texas Secretary of State. However, sometimes you do, like changing the registered agent. Research whether you need to fill out any form.

  • Notify Other Parties

Communicate the decision to all the other related parties. For example, remaining members, employees, concerned customers, and interested vendors.

  • Form to Remove Member from LLC in Texas

Texas does not have a form to remove LLC members. We recommend creating and keeping a document ready with all the necessary details. You can use the following template: 

[Your LLC name]
[LLC Address]
[City, State, Zip Code]
[Date]

Notice of Removal of a Member

To: [Name of the Member Being Removed]

[Member’s Address]
[City, State, Zip Code]

Dear [Member’s Name],

This is an official notice that, according to the operating agreement of [Your LLC Name], you are hereby removed as a member of the LLC effective [Effective Date of Removal].

Your membership was terminated in accordance with the LLC’s operating agreement, namely [the applicable section(s)]. The reasons for your removal include [briefly describe, if applicable].

Please understand that you will no longer have any privileges, obligations, voting, or distribution rights as an LLC member after your removal.

We’ll update the LLC’s membership records to reflect your removal.

Please feel at liberty to contact us if you have any inquiries.

Sincerely,

[Your Name]
[Your Title]
[Your Contact Information]

Moreover, sometimes, instead of yourself, you need to remove someone else for the sake of your LLC. In the next section, we will learn about those reasons.

Reasons for Removing Someone from an LLC

Just like removing yourself, there can be reasons why you need to remove someone else from the LLC, too. Here are some scenarios pictured for you:

  • The LLC member has violated any of the LLC’s operating agreement terms, like not attending mandatory meetings.
  • The member continuously fails to fulfill their LLC responsibilities.
  • A conflict of interest arises with the LLC member.
  • The LLC’s reputation or legal standing is in danger because of the member’s misconduct.
  • The member is suffering from an incapacitating health condition with no sign of recovery.
  • Disputes arise between members.
  • The concerned member has gone bankrupt.
  • There are breaches in the member’s fiduciary duties.
  • The member’s direction does not align with the LLC’s goals.
  • Some legal requirements are due from the members.

Besides these, a change in ownership or management also causes the removal of a member. Moreover, you may also need to maintain a formal process on how to add a member to an LLC in Texas.

Conclusion

We hope you have found your answer to the question, “How to remove yourself from an LLC in Texas?” Whether it is a voluntary departure or an involuntary removal, it is doable if the situation arises as we described. 

To remove yourself or a member from your LLC, you must follow the necessary steps formally. However, we recommend seeking professional advice before proceeding. 

Key Points

  • Reasons for Removing Yourself From an LLC:
      • Business direction change
      • Personal circumstances change
      • Members conflict
      • Financial issues
      • Legal liabilities
      • LLC dissolution
      • Retirement plan
      • Ownership transfer
      • Personal reasons
    • How do you remove yourself from an LLC in Texas?
      • Review the Operating Agreement
      • Notify Other Members
      • Arrange to vote
      • Draft a resignation letter.
      • File a resignation with the state.
      • Settle financial obligations
      • Update records and accounts
      • Finalize Documentation
    • How do I remove a member from an LLC in Texas?
      • Review the Operating Agreement
      • Vote or consent
      • Provide Notice
      • Document the decision.
      • Update membership records.
      • Distribute Assets
      • File the necessary forms.
      • Notify other parties
    • Texas has no LLC member removal form. It is convenient to keep a draft with all the details.
    • Reasons for Removing Someone from an LLC:
      • Breach of contract
      • Poor performance
      • Conflict of interest
      • Misconduct
      • Irreconcilable situation
      • Members conflict
      • Financial issues
      • Fiduciary violation
      • Different business goals
      • Legal Requirements
      • Ownership or management change

Frequently Asked Questions

How much does it cost to dissolve an LLC in Texas?

The filing fee for dissolving your LLC in Texas is $40. You must file the certificate of termination with the SOS, which you can do online. 

What does it mean when an LLC is forfeited in Texas?

When your LLC fails to pay franchise tax, it gets an inactive status, which forfeits its existence. The SOS changes your LLC status once the Comptroller of Public Accounts certifies the negligence.

How to dissolve an LLC in Texas online?

Go to the official site of your Secretary of State and apply for dissolution. You must pay the filing fee, which is $40, online.

Max Smith - LLC Formation

He is a seasoned entrepreneur and legal expert at LLC Formation Hub. With a stellar track record in both business and law, Max simplifies the complexities of LLCs. His practical insights, featured on LLC Formation Hub, empower entrepreneurs across the USA. Max merges business finesse with legal acuity to guide businesses toward success.


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