Closing your limited liability company (LLC) can be an emotional and stressful time. You have a lot to get done, and properly dissolving your LLC in the state(s) where it is registered and formalizing a "dissolution agreement" between the owners of the LLC are among the most important.
Dissolving your LLC properly is a critical step to ensure you do not become personally liable for the debts or liabilities of the LLC. If you do not follow all the proper steps to dissolving a LLC, you run the risk of incurring significant tax and other penalties, even when you had no income and no tax due! For example, did you know that for each month or portion of a month your IRS federal tax return is late, you are penalized $195, for a maximum of 12 months multiplied by the number of managing members?
And, if you don’t have a “dissolution agreement” in place between you and the other owners (or members) of the LLC, you run the risk of a former partner doing something to create personal liability for you, or later file a lawsuit against you claiming you harmed them or the LLC.
Dissolving a LLC is not complicated, but there are a number of critical steps that MUST be followed:
Technically, you should initiate the dissolution process immediately after the owners, members, or managers have decided to close or dissolve the company. You definitely don’t want to wait too long, especially if you’re approaching year’s end (to avoid having to submit next year’s taxes) or if you have disputes or debates among the owners.
To properly dissolve a LLC, you need to follow the requirements in the Operating Agreement. If there is no Operating Agreement, then you need to default to what the law is in the domestic state where the LLC is filed. These requirements usually deal with voting percentages for the owners, properly distributing assets, and paying off liabilities.
After handling the formalities of a proper wind-down of a LLC, then you need to file paperwork with the state(s) where registered, with the IRS and to put a dissolution agreement together with all the owners. Specific paperwork includes (but is not necessarily limited to):
Our affordable flat-rate pricing makes it easy to dissolve your LLC online in minutes, with an offering that is customized for the unique requirements of you and your LLC. Fill out our short dissolution questionnaire and our expert LLC attorneys will handle the rest.
Sorry, we aren't online at the moment. Leave a message.
Need more help? Chat with someone at Law 4 Small Business now.