How Do I Dissolve an LLC?

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It is easier to form an LLC than to dissolve one, except when an LLC automatically dissolves because it was formed for a limited duration. Nevertheless, it is important to go through the process of dissolving your LLC rather than simply ceasing operations because the LLC may be subject to continuing tax and legal obligations even if it no longer operates.

Vote to dissolve the LLC. Some LLCs require votes representing a majority of shares, and some require unanimous consent, depending on state law and the provisions of any operating agreement that may be in effect.

Read More: What Forms Are Needed to Dissolve an LLC?

Draft a written resolution stating the intent to dissolve the LLC, have all members who voted in favor of dissolution sign and date it and distribute a copy to each member. This could become important if the validity of the dissolution is challenged later.

File Form 966 with the IRS within 30 days of the date of the dissolution resolution, so that the LLC will no longer be subject to federal tax filing requirements.

Notify all LLC creditors of the impending dissolution. You must provide a means for creditors to submit claims to the LLC. Creditors will be subject to a deadline for filing claims that varies according to state law.

Satisfy all known LLC creditors including the tax authorities. All known LLC debts must be paid before any LLC assets can be distributed to members.

Obtain a tax certificate from the state government, establishing that the LLC is current on all tax obligations, if this is required by your state.

Distribute all remaining LLC assets to members in accordance with their respective interests in the LLC or as previously agreed among the members.

File Articles of Dissolution, or your state's equivalent, with the Secretary of State of the state in which the LLC was formed. You will have to provide the name of the LLC, the effective date of dissolution and, perhaps, the reason for dissolution. Many states offer fill-in-the-blank forms on the Secretary of State's website. You will have to pay a small filing fee.

File the LLC's final tax return with the IRS and state taxation authorities.

Tips

  • If your reason for dissolving the LLC is to form a corporation, check the law of your state. Some states allow LLCs to be converted to corporations without having to go through the process of LLC dissolution and corporate formation.

References

About the Author

David Carnes has been a full-time writer since 1998 and has published two full-length novels. He spends much of his time in various Asian countries and is fluent in Mandarin Chinese. He earned a Juris Doctorate from the University of Kentucky College of Law.

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