There is a clear process to follow to dissolve an LLC successfully leaving no loose ends to trip you up down the track.
In this article, we give an overview of the key steps and also provide links to our state by state guides to dissolving an LLC where you are based.
The Basic Process for Dissolving an LLC
- Get agreement from all members
- File the Articles of Cancellation
- Notification to Creditors and Stakeholders
- Resolve an outstanding tax issues
- Distribute any remaining assets among members
Advice for each state
Choose your state below for the EXACT process you need for your area.
Detail on the key steps
Get agreement from all members
First, the members have to agree to close the LLC. The operating agreement spells out how this works—sometimes it’s a majority vote, sometimes everyone has to say yes.
If the agreement doesn’t mention it, state law usually says a majority vote is enough. Members should keep some kind of written record, like meeting minutes or a signed note. That way, there’s proof if questions come up later.
Without member approval, you really can’t start dissolving the company. It’s the first legal step, no way around it.
File the Articles of Cancellation
Fill in the correct form to file the Articles of Cancellation that are required to formallywind up your LLC. This form can be obtained from the relevant state body. Another option is to use a service such as Bizee to handle the dissolution for you – it’s cheap, easy and takes away any risk of error in the DIY approach.
Notification to Creditors and Stakeholders
Before you finish dissolving, let all creditors, claimants, and stakeholders know what’s happening. This makes sure any debts or contracts get handled.
Send a formal written notice, just to be safe. Keeping records of these communications is smart—it shows you did things by the book if anyone asks later.
Resolve an outstanding tax issues
Settle all state and federal tax matters before closing the LLC. File any leftover tax returns and pay what you owe—income tax, payroll tax, sales tax, the whole lot.
The state might ask for a tax clearance or proof you’re caught up when you file dissolution papers. The IRS sometimes wants a final return marked “final” to close out federal tax accounts. It’s a bit tedious, but it’s got to be done.
Distribute any remaining assets among members
Once the debts and taxes are handled, any assets left go to the members. The LLC operating agreement lays out exactly how this should happen.
Usually, folks split up assets according to their ownership percentages or whatever shares everyone agreed on. It’s a good idea for the LLC to write down all distributions, just in case disagreements pop up later.
