Canceling an LLC

By Elizabeth Rayne

A limited liability company, an independent business entity formed under state law, comes into existence when a business files articles of organization with the state. The owners, or members, of an LLC are not personally liable for the business's debts. After making the difficult decision to close your LLC, you should dissolve the corporation in accordance with state law to start your next business venture unencumbered.

A limited liability company, an independent business entity formed under state law, comes into existence when a business files articles of organization with the state. The owners, or members, of an LLC are not personally liable for the business's debts. After making the difficult decision to close your LLC, you should dissolve the corporation in accordance with state law to start your next business venture unencumbered.

State Regulations

Refer to your state's LLC statute to properly dissolve the corporation. Often, you may find the relevant information and forms on the website of your state's secretary of state. LLC owners simply may not close up shop and walk away from the business, and it is essential to correctly follow your state's dissolution procedure. If you fail to do so, the LLC and its owners may continue to be responsible for taxes, state filings and licensing fees for the business.

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Vote to Dissolve

In most cases, the members of an LLC vote to dissolve the company. If you have an operating agreement for the company, it may specify when and how the company may close. Some agreements provide a specific closure date, or may state how many members should agree to dissolve the company. When voting to close the business, record the decision in the corporation's official documents. LLCs owned by a sole individual may close at the owner's discretion.

Tax and Dissolution Filings

An LLC should clear all outstanding tax requirements and file articles of dissolution to effectively close the business in most states. You may file final tax returns with the state and the IRS. Consider indicating on the forms that the tax documents are the business's final returns. Your state may require you to make additional sales tax filings. If you have employees, confirm that you have paid payroll taxes. You also may notify the state that the LLC is closing by filing articles of dissolution, usually with the secretary of state. The state may charge your business a fee to file the dissolution.

Winding Up Affairs

Consider notifying your LLC's creditors and lenders that the business will be closing and create a plan to address any unresolved or potential future debts. If the LLC still holds assets after debts have been paid, return the remaining assets to the corporation's members who previously have not been repaid. Once they have been paid, distribute the remaining assets to all the members equally.

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How to Liquidate an LLC in New Jersey

References

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How to Convert an LLC to a Corporation

A limited liability company, or LLC, is formed under state law pursuant to a state's Limited Liability Company Act. In a few states, the Act specifically provides for the conversion of an LLC into another business entity type by filing a certificate of conversion and formation papers with the state. In most states, however, an LLC must dissolve and reform as a corporation to successfully complete a conversion.

How to Dissolve a Corporation With Votes in California

Voting to dissolve a corporation is one step of many in closing a California business, although it is an important step. The voting process requires a corporation to review its organizing documents, determine who will make the decision, and file documents with the state to certify the vote to dissolve the company. Once the vote has been conducted and recorded, the corporation must address the next steps to move forward with dissolution.

What Forms Are Needed to Dissolve an LLC?

You must dissolve your limited liability company with your state if you are no longer doing business. The process will transfer your company's assets and settle your debts. Some states tax LLCs and have annual reporting requirements, and if you do not officially dissolve the company, fees and penalties may be assessed by the state even after your business has closed. The exact forms needed for LLC dissolution vary by state and the size of your LLC.

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