How to Transfer Ownership of Assets After a Limited Liability Company's Termination
Transferring assets after an LLC termination is, in theory, very straightforward -- the ownership of assets is outlined in the operating agreement, and all assets should be divided proportionately in accordance with each member's ownership. However, this ease applies only to liquid assets like cash. Illiquid assets, such as company goodwill, are much harder to distribute.
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Instructions
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Pay off all the creditors to whom the LLC owes money. This includes the bank, private individuals who have loaned personal money to the company and customers who are owed a refund, warranty service or delayed good. All creditors should be paid off before owners receive a penny.
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Read the LLC Operating Agreement. This outlines who the owners are and how much of a percentage of the company they own.
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Divide the liquid assets, such as cash, between all owners in accordance with each person's share of ownership.
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Make a list of hard assets such as equipment and inventory, and company "goodwill," which refers to the reputation of the company and can be preserved through such mediums as having the rights to the company's name and website.
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Exchange as many hard assets for liquid assets as possible. For example, see how much of the equipment or inventory can be returned or resold. Once this is converted into a liquid asset, it can be divided equally.
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Assess the value of hard assets that cannot be made liquid. Either hire a professional assessor or do it yourself. Hiring a professional assessor reduces the risk of fighting between the owners. Doing it yourself is cheaper.
Once the values are assessed, divide the hard assets among the owners in accordance with each person's percentage of ownership.
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Refer to the operating agreement's provisions about distribution of goodwill to see who has the right to claim the company's goodwill. If no provision is written, the owners will have to negotiate this with one another. If the owners cannot come to an agreement, refer the matter to a professional mediator.
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References
- Photo Credit Cash image by Greg Carpenter from Fotolia.com
