{"id":164,"date":"2023-04-15T13:03:54","date_gmt":"2023-04-15T13:03:54","guid":{"rendered":"https:\/\/www.smallbizgenius.net\/?p=164"},"modified":"2024-02-06T07:23:47","modified_gmt":"2024-02-06T07:23:47","slug":"how-to-dissolve-an-llc","status":"publish","type":"post","link":"https:\/\/www.smallbizgenius.net\/knowledge-base\/how-to-dissolve-an-llc\/","title":{"rendered":"How to Dissolve an LLC: A Step-by-Step Guide"},"content":{"rendered":"\n

Not all businesses are built to last, and, occasionally, the time comes to close your LLC<\/a>. If you were excited about starting it, this could be a stressful moment, but there are also those looking forward to ending things, as it can be the lesser of two evils.<\/p>\n\n\n\n

Whatever the case may be, terminating a company requires some know-how. Luckily, if you were worried about how to dissolve an LLC, we\u2019re here to go through the process with you and discuss the steps you need to take.<\/p>\n\n\n\n

Several factors affect this process, including the laws of the state your company was registered and operated in, the number of LLC members, and whether there is an LLC Operating Agreement in place. Ultimately, there are different kinds of dissolutions for different kinds of LLCs, so you need to discern which category yours is in and what is required to complete the process.<\/p>\n\n\n\n

Why Would You Need To Dissolve an LLC?<\/strong><\/h2>\n\n\n\n

\u201cForgetting\u201d to do so is, unfortunately, a common solution, especially for small businesses without employees or companies that were never actually used. This is certainly the path of least resistance in the short-term, but ending things properly has its benefits. For one, you won\u2019t be surprised by a fine from a government agency or, even worse, a lawsuit for unpaid debt.<\/p>\n\n\n\n

As an LLC owner, you are legally required to file annual reports, pay yearly fees, and minimum taxes. These will stack up, along with their late fees, until you take the necessary steps to dissolve an LLC.<\/p>\n\n\n\n

Step 1: Voting on Dissolution<\/strong><\/h3>\n\n\n\n

If you are the sole member of your LLC, then you skip this altogether. However, if you\u2019re not the only founder, all LLC members must vote on dissolution before any action is taken. This is also where an LLC Operating Agreement could come in handy – provided you created one when establishing your LLC – as it usually sets the rules for voting on dissolution.<\/p>\n\n\n\n

Step 2: Filing for Dissolution<\/strong><\/h3>\n\n\n\n

This step could either come second or last, depending on your state\u2019s rules. Nevertheless, you need to file the necessary papers, usually the Articles of Dissolution, with the relevant authority. It is usually the same place where you filed the papers to open your LLC<\/a> in the first place, most likely the Secretary of State.<\/p>\n\n\n\n

Keep in mind that these procedures and their accompanying fees vary between states, particularly if your LLC operated in more than one. While checking everything might sound troublesome, it\u2019s a lot less so than the potential tax issues you might be ending up with otherwise.<\/p>\n\n\n\n

Step 3: Filing for a Final Tax Return<\/strong><\/h3>\n\n\n\n

Wondering how to dissolve an LLC with the IRS? Closing your company means you have to check in with the Internal Revenue Service (IRS), and your first order of business is filing a final tax return for your LLC.<\/p>\n\n\n\n

For example, if you have employees, you must pay out their final wages and compensations, if any are owed. In addition, you have to make final federal tax deposits, report employment taxes, and all payments to contract owners exceeding $600.<\/p>\n\n\n\n

Once you pay the taxes you owe, the last step is to cancel your EIN business number<\/a> and close your IRS business account. To avoid any confusion, you can always check the IRS\u2019s business closing checklist.<\/a><\/p>\n\n\n\n

Step 4: Notify Your Creditors<\/strong><\/h3>\n\n\n\n

Some guides on how to dissolve an LLC suggest this as the first step, simply because it is good business practice. In truth, it is entirely up to you when you\u2019ll do it, so long as you get it done.<\/p>\n\n\n\n

Notifying your creditors will help you keep all your finances in check. However, the rules here also differ according to state: You might be eligible for claims from companies you\u2019ve never worked with. Some states require you to put up a notice within your local newspaper, too.<\/p>\n\n\n\n

Still, whatever the state-specific rules, you must notify your creditors when dissolving an LLC. The memo you send should contain:<\/p>\n\n\n\n