I believe I am listed as 50% owner in a business that is falling apart. We have nothing in writing except for our articles of incorporation that list me as director below the husband (vice-president) and the wife (president). We had verbally (in front of their friend, our accountant) agreed to pay me $80,000 per year plus split the remaining profits. In 2008 they have paid me a total of approx $24,000 and spent the rest on paying down loans, lines of credit, etc and leave nothing for me to live on. I told them they need to pay me and they say there is no money, but yet pay our front office manager more than me in 2008 and have given her bonuses on top of that.
I have decided to take a paying job as an employee so I can support my family. Is there anyway I can get out of this LLC if they refuse to sell the business to my new employer?
– Will, Wisconsin
First, you’re going to need to speak to an attorney in Wisconsin (I’m assuming the LLC is a Wisconsin LLC and the other members are Wisconsin residents).
Depending on Wisconsin law and what is written in your LLC Operating Agreement (if you have one, that is), you might be able to exit the LLC by filing a few forms. The formal term for exiting an LLC as a member is called “withdrawal”.
It could also be that you are a director without actually being a member of the LLC. In that situation, you can probably simply resign as a director. You’ll have to check the LLC’s operating agreement and/or Wisconsin law to see the procedure for a director resigning.
In order to recover the compensation you say you are owed, you’re probably going to have to sue. Given that you only had a verbal agreement, your lawsuit will be more expensive to prosecute and the chances of winning slimmer.
This is why people need to have written operating agreements.
If you need additional customization, you can take this document to a local lawyer familiar with closely held businesses and he/she can work from it. You will more than make back the $99 spent through savings in legal expenses by not having your attorney start from scratch.
Even if you’re simply working for an LLC, and not a member, you need a written agreement.
Everyone out there reading this, please learn from this reader’s experience–get business done in writing!
When you by $5.00 worth of batteries at Walmart, they give you a written receipt.
But when people do deals involving tens of thousands of dollars, they do it verbally.