How to Dissolve an LLC?

Judicial Dissolution

  • Failure of the LLC to pay required fees or taxes.
  • Failure of the LLC to remain compliant with state or federal laws.
  • The result of a lawsuit started by a sullen and disgruntled member of the Limited Liability Company who wants to dismantle their business ties with the rest of the LLCs members.

Administrative Dissolution

  • Failure of the LLC to pay required state fees or taxes.
  • Failure of the LLC to remain compliant with state or federal laws, i.e., filing a mandated annual report, among others.

Voluntary Dissolution

  • LLC members can set up a vote where each member can vote to dissolve the firm. This can happen at any time.
  • The LLC’s operating agreement contains a triggering-clause that can set up the dissolution. An example would be that the LLC would be dissolved upon the death of one of the members.

How to Dissolve an LLC?

  • File withdrawal/cancellation documents in relevant states. This helps ensure you avoid fines for unfiled annual reports.
  • File a final LLC tax return; be sure to check the box on the IRS form that states — Final Tax Return. The IRS offers guidance on how to close a business appropriately in accordance with its regulations, when applicable.
  • Pay any outstanding, final payroll taxes. The IRS has the authority to obtain restitution from an LLC member or anyone else who is authorized to sign payroll taxes for the LLC.
  • Cancel the FEIN — the LLC’s Federal Employer Identification Number is a protective measure but also alerts the Internal Revenue Service that the LLC is no longer operational and will no longer be filing future taxation paperwork.
  • Close any and all business licenses related to the LLC’s operations.

Additional Procedures — After the Dissolution’s Approval

Settling Creditor Claims

Distributing Assets

The Take-Away

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