How To Get Your Name Off The Business
I picked up the phone.
The woman on the other end was clearly stressed. “They told me you could get my name off the business,” she said quietly.
She and her friend had opened a personal services business together and it wasn’t working out. The friend never quit her day job, leaving my new client to manage the business and provide the services by herself. Then the partner complained about how everything was done.
Her situation was fairly straightforward. We worked through how to change the name of the company’s registered agent at the Secretary of State, and how to change the responsible party with the IRS. She just wanted out – she didn’t want to be paid for her share of the business.
It is sometimes not so simple to “get your name off the business.”
Walking away from a business may be fairly easy, but getting a disgruntled partner to buy you out, or agree to shoulder all the company’s debts is not.
The best way to handle this situation is to think about it while forming the business. Best practice is to sign an Owner’s Agreement ahead of time. It could be called a Partnership Agreement, Shareholders Agreement, Operating Agreement or Buy-Sell Agreement.
In these documents, there will be a process for one owner to leave and to be bought out by the other owner. It will list triggering events (such as deadlock, death, disability, incompetency, bankruptcy, etc.). There will be a pricing mechanism and a timing mechanism.