Two-person LLC in Seattle (services). My partner of 3 years just told me he wants to 'step back' for 6-9 months. No medical reason, just burnout. We have a lease, two employees, and a client load that assumes both of us. He's not proposing to give up his membership interest, just stop showing up. Has anyone navigated this without it turning into a legal mess? I don't want to be a jerk but I also can't carry payroll solo while he figures himself out.
Partnerships
My Seattle LLC partner wants to take a break from the business
What does your operating agreement say about duties and leave? If it's silent (like most of the boilerplate ones), you're in the 'hope your partner is reasonable' zone.
lol 'step back' is corporate for 'you do my job and my car payment keeps coming out of the account'
Honestly burnout is real and three years of small business is a lot. But if he's not proposing to give up his membership interest, just stop showing up, that's the part that would eat at me. If he's not contributing, why is he still getting distributions?
We don't really have a formal leave policy, which is now obvious. We're 50/50, both managers. He said he 'doesn't want to force me to buy him out.'
Step 1: get an attorney involved before you agree to anything verbally. Step 2: don't float this on handshakes and vibes. Step 3: define what 'break' means in writing: no distributions, no voting, no client contact, and a deadline. 'Until I feel better' is not a plan.
Are you sure he's burned out and not quietly interviewing or starting something? Not to be paranoid but 'step back for a while' can be a soft exit. I've seen it.
Yeah ^ if you're going to pause distributions, make sure the operating agreement lets you amend that. 50/50 deadlock is a fun place to be.
This might be a blessing. A 6-month break is a chance to test whether the business actually needs two owners or just needs two salaries.
That's an angle I hadn't considered. It might actually tell me what the role is worth.
bean_and_byte just gave you the least expensive consultant you'll ever get
Burnout isn't a legal concept. He is still a member. He still gets distributions unless the operating agreement or a real amendment changes that. He said he doesn't want to force you to buy him out, which sounds generous until you realize he also doesn't want to lose the equity. So, what is he actually offering?
Sorry to double-post but also check the lease and any personal guarantees.If he steps back and revenue drops, who's on the hook?
Document everything from today forward. Even just a shared Google doc of what he said and what you agreed to. Memory gets fuzzy when money is involved.
And get his proposal in writing before you counter. You'll learn a lot from whether he sends you an actual memo or just a text that says 'thinking of taking some time.'