Dissolve an LLC

How to dissolve your LLC in 10 steps

Dissolution of your LLC is done at the state level by first voting to dissolve your LLC, filing final tax returns and paying all payroll and other taxes owed. Then, once you’ve filed your articles of dissolution with the secretary of state and it gets approved, you’ve technically completed the process. However, to eliminate future liabilities, there are several other steps to terminate your LLC, including canceling your employee identification number, notifying creditors, distributing assets properly and keeping proper records for an appropriate amount of time.

1. Vote to dissolve your LLC:

• Begin by reviewing the LLC’s operating agreement to determine the precise process for obtaining member consent. If it stipulates a meeting, schedule one and record detailed meeting minutes. Ensure all members express their unanimous approval for the dissolution. Alternatively, if written consents are allowed, collect and document each member’s written agreement.

2. Fulfill Obligations: 

• Conduct a meticulous financial review, listing all outstanding obligations. Settle debts, loans, and taxes at both federal and state levels. Request and settle final invoices with vendors. Ensure all financial loose ends are tied up, leaving the LLC in good standing.

3. File Articles of Dissolution:

• Obtain the official “Articles of Dissolution” form from the Secretary of State’s office or website. Accurately complete the form with essential details, including the LLC’s name, reason for dissolution, and unanimous member approval. Pay any necessary filing fees. Submit the form to the Secretary of State, adhering to any specific submission guidelines.

4. File Final Tax Returns and Obtain Tax Clearance:

• Contact the state’s taxation department to verify if tax clearance is mandatory. If required, settle any outstanding tax liabilities. Obtain a tax clearance certificate as evidence of compliance. Include this certificate when submitting the Articles of Dissolution to the Secretary of State.

5. Cancel Licenses and Permits:

• Create a comprehensive list of all licenses and permits held by the LLC. Notify the issuing authorities at local and state levels about the LLC’s dissolution. Follow their specific cancellation procedures. Request and retain written confirmations of the cancellations.

6. Notify Creditors and Customers:

• Draft formal notification letters to creditors, customers, suppliers, and other relevant parties. Clearly communicate the LLC’s dissolution, providing contact information for any remaining matters. Encourage stakeholders to send final invoices promptly.

7. Distribution of Assets:

• Refer to the LLC’s operating agreement for guidelines on distributing remaining assets among members. Document the asset distribution meticulously. Ensure that all members acknowledge and receive their allotted share. If there are disputes, seek legal counsel to address them promptly.

8. Cancel Registrations in Other States:

• If your Limited Liability Company (LLC) has been duly registered to conduct business in multiple states, it is imperative to submit a formal withdrawal form to relinquish the authorization to transact business in each respective state. This form may be denoted as an “application of withdrawal,” “certificate of termination of existence,” “termination of registration,” or “certificate of surrender of right to transact business.”

9. Close the EIN and Bank Accounts:

• Close or cancel any business licenses or permits linked to your company. In addition, once you’ve filed all tax returns and paid taxes, close your employer identification number (EIN) and state identification tax number. This signals to the IRS that your business is closed and you won’t be filing any more tax returns. Notify the bank of the LLC’s dissolution and request the closure of all business accounts. Clear any outstanding transactions and transfer remaining funds according to the agreed-upon distribution among members. Obtain confirmation of account closure.

10. Final Tax Filings:

• Engage with an accountant or tax professional to prepare the final federal and state tax returns for the LLC. Clearly indicate that these are the last returns for the entity. Settle any remaining tax liabilities promptly and thoroughly. Retain copies of the final tax returns for future reference.