How to Dissolve a LLC

 

To dissolve (also known as Cancellation) an LLC is to put an end to the LLC's existence.  And just as a new LLC is created by filing articles of organization, cancelling/dissolving an LLC requires the filing of articles of cancellation.

But first you must decide if you wish to voluntarily or involuntarily dissolove (cancel) your limited liability company.

 

Voluntary Dissolution

To voluntarily dissolve your LLC, you must file articles of dissolution/ withdrawal with the same state agency which formed your LLC in the first place.

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Most state agencies will require that all state taxes & fees are paid and up to date before the state will allow dissolution to be filed.

Involuntary Dissolution


In many states, simply doing nothing will cause the state to involuntarily dissolve the LLC for not keeping up with the state's annual filing requirements. If you choose to not keep up with the state's filing requirements, it is called abandonment, because you are abandoning the charter and allowing the state to cancel or dissolve the charter.

NOTE: There may be negative tax consequenses by abandoning an entity which has had operations. Consult your tax or legal advisor to see if this applies to your situation.

Withdrawl in Foreign States

If your LLC is formed in one state (formation state) but also registered for foreign authority in another state, and your LLC dissolves in the formation state, it must also withdraw its foreign authority in the other state(s). This is a similar procedure of filing withdraw paperwork in the foreign state, along with a fee, and making sure state taxes are up to date.

Each State Different

Because each state's requirements are different, you should investigate your formation state's requirements for dissolution before making a decision. You can start the research process by going to State Research (from the SmallBiZ.com Home page) to find your state's website location for more details.

Who to Notify

After you have formally dissolved your LLC, you must notify those that may have an interest in your LLC's activities.  Besides the obvious of settling all of the LLC's debts/liabilities (usually required before dissolution of the LLC) and closed out your bank account, here are some other people/entities you'll need to notify:

IRS

If you have obtained an EIN and you have previously filed a tax return listing your LLC's activities, or you intend to list the LLC's activities (receiving income and or expenses) on the next tax return, you can indicate the dissolution in your next tax return.  Otherwise, if your LLC has had no activities so far, you need to send a letter, on the company's stationary, and listing the LLC's EIN, stating that the company is dissolved and no longer conducting business.  Send this letter to the address on your EIN acceptance letter from the IRS.

Other State Agencies

Although the agency that forms and dissolves LLC's would be obviously privy to your LLC's dissolution, do NOT assume all other state agencies will get the memo.  In fact, you should assume otherwise.  You will also want to notify your state's Dept of Revenue (whomever the tax body is), and any other state departments, boards of licensing, or other agencies, that might have been originally notified as part of your registration.

Registered Agent

Your LLC's registered agent, if it is not you, needs to be told of the LLC's dissolution.  Do this in writing, or as requested by your agent.

Other Vendors

If you have other vendors or companies/people that the LLC has agreements with, or credit, you might want to make sure that they are notified as well.

 

Other Related Links

· How to change LLC members

· How to change your LLC's Name

· Your State's Requirements

· A Comparision of Business Entities

· What is an S Corporation

· What is Foreign Authority?