Removing Partners and Converting to LLC

[xtroublex]

I am in Phoenix, AZ and I own a partnership called Something Creative. The company started with 4 partners but as is always the case, 2 of the partners do not wish to be involved any longer. There are no problems and it is voluntary.

What I would like to do is remove the 2 partners from the partnership, then form an LLC. What would I need to do to accomplish this?

Thanks

 

[tranquility]

The easiest way is to wind up the partnership and re-start with an LLC. I understand that can be problematic depending on the numbers, the inside and outside basis and other things. But, at least you could do that without substantial advice. Anything else is going to require a CPA or attorney and a handful(s) of cash.

 

[xtroublex]

The easiest way is to wind up the partnership and re-start with an LLC. I understand that can be problematic depending on the numbers, the inside and outside basis and other things. But, at least you could do that without substantial advice. Anything else is going to require a CPA or attorney and a handful(s) of cash.

I wouldn't mind that but will I loose all the credit, name, tax id, etc that the business has built?

 

[clueless3]

What I would like to do is remove the 2 partners from the partnership, then form an LLC. What would I need to do to accomplish this?

You cannot simply "convert" a Partnership into an LLC. As suggested, you need to dissolve one and start the other.

I wouldn't mind that but will I loose all the credit, name, tax id, etc that the business has built?

Once you go from a Partnership into an LLC, you MUST (by law) change the name. (The LLC name must end with "Limited Liability Company" or "LLC".) Therefore, you'll have to apply for a new tax ID, start new credit, etc.

 

[tranquility]

"credit"
You lose that anyway. An LLC has limited liability--isn't that the point? You will have to rebuild your credit as a corp., unless you want to give personal guarantees.

"name"
All you do is add LLC to the end. Any value to the name should be handled through winding up the partnership.

"tax id"
You'll need a new one anyway. Who cares? It's a two minute operation to get an ID.

"etc"
What do you mean?