How do I get my name off of a business and relieve myself of any future liabilities?

UPDATED: Nov 13, 2014

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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


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 8 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).

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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