Which Are The Best Methods You Should Use To Successfully Dissolve An LLC?

There are many things everyone should know about how to close a limited liability company successfully. To dissolve an LLC, you need to follow several essential steps along the way. The most important thing to know for ending your LLC status is that there are no shortcuts, meaning you need to follow the rules that we will talk about in this article.

It’s of Crucial Importance to Dissolve an LLC Properly

It’s of significant importance that you officially close your LLC. If you don’t, you will be held personally responsible and liable for any unpaid taxes and debts of the LLC. Many states have placed an annual fee against LLCs, and in case you don’t dissolve your LLC as you should, the fees will continue to pile up. Also, you should know that some states will charge a fee if an open limited liability company doesn’t file a tax return. This means that if you don’t close your LLC, you may be charged for that as well.

It’s not possible to transfer the property owned in the name of your LLC to your name until you dissolve your LLC the right way. That’s the reason why you must make sure that you transfer the ownership. Another vital thing you must do is to close out all your permits. Use formal LLC dissolution, and that way, you’ll prevent anyone else from using them. In case you leave them active without active monitoring, someone else can use them without your consent and knowledge, which will place you in legal danger.

You Must Agree to Dissolve

The first step to dissolve an LLC is to make a formal and official decision to do so. Start a meeting with your LLC members and vote for dissolving the LLC officially. You should be aware that every state has different vote requirements. In some cases, you may need two-thirds, the majority, or even an unanimously written agreement to dissolve your LLC. You may also need to include closing procedures in your operating agreement. These are the reasons why you need to check your state’s rules and requirements first.

Make Everything Official

Look out for the form to file that indicates you’re closing your LLC. You can find the form on the Secretary of State’s website. To formally dissolve an LLC, you need to complete the form and carefully follow the filing instructions.

You Need to Give Notice

Every state has its requirements when it comes to the official notice, and you need to make sure how much notice you need to give. When the decision is final to close your LLC, you must notify all your creditors that you’re closing your LLC. In case they plan on filing a lawsuit against the company, they’ll know the time frame in which they can act (it’s usually from 3 to 5 years).

You Should Wrap Up the Finances

To successfully dissolve an LLC, you must pay all the bills that LLC has. Also, pay attention to other things like possible obligations you may have that you’re not aware of yet. There may be outstanding bills, so you need to prepare the finances for the upcoming months, as well.

You need to pay all your debts before you can transfer company assets to the LLC’s members. Make sure that all vendor accounts are closed, as well as the utility accounts, and let your customers know that you’re closing. Another important thing is to inform your employees about the closing date. You must pay them until the last day of work, and in some states, you’ll need to pay them for the unused vacation.

Pay Your Taxes

Probably the most critical step for successfully dissolving your LLC is to pay your taxes. You need to close LLC’s tax accounts with the IRS and the state. Pay up for anything you owe and make sure that you properly fund all your payroll withholding, as well as sales taxes. Filing a final tax return with the IRS and the state is the last step for completely closing your LLC. You need to check the box in the form that shows that this is the final return for this LLC. Schedule a K-1 and make copies for each member, so they’ll know what they need to report when it comes to gains and losses on their personal taxes. Contact the IRS to close your employer identification number.

Closing Everything Down

After the finances, you should close all bank accounts, and cancel all registrations, permits, and insurance policies that LLC has. Keep a copy of all documentation safely for seven years in case it comes to an audit in the future.

Final Steps

After you’ve paid up all debts and taxes, the next step is to divide the assets among the LLC members. The operating agreement will specify the percentage that each member must receive.

Make sure you follow through each step for successfully closing an LLC. That way, every member will be protected, and you can move on with no worries. If you need more details on how to dissolve an LLC, give us a call at (305) 921-0440 or contact us via email at [email protected].