How do I get my name off of a business and relieve myself of any future liabilities?
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How do I get my name off of a business and relieve myself of any future liabilities?
I opened a business with my friend where we agreed that I would be a 25% owner, but due to a variety of things, I will no longer be an owner of the business. I was wondering how I would go about legally removing myself from the business so that I’m not responsible for 25% of the taxes. I don’t know how to do this and I was wondering if anyone would know a website, form, phone number, etc that I could use to remove myself from the tax responsibilities. If it makes a difference, I will be paid $1000/mo. for 10 months as compensation for selling my share of the business.
Asked on November 13, 2014 under Business Law, New York
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 9 years ago | Contributor
If you can transfer your share of the business to someone--like your friend--that will remove your obligations. You have to make sure that another person acquires your entire interest--e.g. buys it from you--and that the transaction is well-documented and provable. Once that is the case, you can go you to state's department of state and change the business registration, etc. filings--you can get the forms from the state agency and most likely do it all online. You also need to be diligent about taking yourself off bankaccounts, off any company credit cards, etc. But most of that is simply adminstration and follow-up: the key thing is to sell or otherwise transfer your interest, which it seems you are doing.
The above said, note the following:
1) If you personally guaranteed any debts or obligations, like a lease, loan or line of credit, etc., you will *still* be responsible for those: you will still be contractually obligated to the guaranty agreement(s) you signed. Thereis no way to remove yourself from those without the consent of all parties (e.g. the landlord or lender). The best you can do there is, as part of the price of selling your interest, have the other owner or the business itself agree to indemnify you for any losses.
2) You will still be liable for any tax obligations for the period during which you were an owner, even if they come up in the future (remember: the IRS can audit you for up to at least 6 years after a tax year).
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