Do LLCs Expire?

Each state has its own laws regarding the creation of a limited liability company, or LLC, and the circumstances under which it expires. State LLC laws vary somewhat but, in general, an LLC exists in perpetuity unless it is dissolved by it owners or involuntarily dissolved as required by law. In some states, LLC owners can specify an expiration date for the LLC when it is created.

Planning for the LLC's Expiration

An LLC comes into existence when its owners — commonly referred to as members — file the required organizing document with a state agency. Most states refer to the organizing document as the articles of organization. The minimum information required for the articles of organization is determined by state law. Some states, such as Arizona, allow the LLC members to specify in the articles of organization a date on which the LLC will expire. As an alternative, the members can use the occurrence of a specific event, such as the withdrawal of a member, as the expiration of the LLC. If no expiration date or event is stated, the LLC's existence is presumed to be perpetual.

Expiration by Voluntary Dissolution

An LLC will expire when the members voluntarily act to terminate the LLC’s existence in accordance with the legal requirements in their state, which can differ significantly. For example, in California an LLC expires when the members unanimously consent to file a certificate of cancellation. After the certificate is filed, registration of the LLC will be canceled and all of its powers, rights and privileges will cease. Nevada law requires the filing of articles of dissolution for an LLC to expire; however, the articles can be filed only after all debts and obligations of the LLC have been adequately provided for and any remaining assets distributed to the members. In Michigan, a certificate of dissolution can be filed on the unanimous consent of the members, but within 60 days of filing the certificate the LLC must request a tax clearance certificate from the Michigan Tax Clearance Division.

Expiration by Involuntary Dissolution

As a condition of remaining in good standing with the state, an LLC must comply with state LLC law, especially all periodic reporting or fee-paying requirements. Failure to comply with the law can jeopardize the LLC's existence when the penalty for noncompliance is the involuntary dissolution of the LLC by the state, commonly called an administrative dissolution. As an example, Florida LLC law lists the following reasons for administrative dissolution: failing to timely file its annual report or pay the reporting fee; failing to notify the state within 30 days regarding a change in any information for its registered agent or not having a registered agent; and failing to timely respond to formal state inquiries.

Reinstatement After Involuntary Dissolution

State law generally allows an LLC that was administratively dissolved to apply for reinstatement; however, the conditions for reinstatement will vary. For example, Utah gives a two-year period from the date of dissolution to submit an application for reinstatement. Arizona limits the reinstatement period to six months after the effective date of dissolution. In either situation, an appropriate written application must be filed with the state along with any applicable fees and penalties.

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