The dissolution provisions of the North Carolina Limited Liability Company Act outline the procedures a limited liability company, or LLC, must follow to correctly close down the company and ensure all current and future obligations are met. Voluntary dissolution requires all members to consent in writing and the filing of articles of dissolution with the Department of State. The law also includes special creditor notification provisions to ensure that members of a LLC are not held personally liable for company debts that may arise after dissolution.
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Call a meeting of the members. Adopt a resolution to dissolve the LLC. North Carolina law requires all members to consent to the dissolution in writing.
Appoint a manager to wind down company affairs. The manager generally pays all outstanding obligations and debts and makes provisions for any outstanding lawsuits or claims that the company knows will be made in the future. Leftover assets normally go first to cash out each member's capital account and any remaining to members in proportion to each member's ownership interest.
Go to the North Carolina Department of State website and file articles of dissolution with the state. Download the articles of dissolution template (see Resources). The articles require the name of the LLC, the date the articles of organization were filed, an note that the dissolution is happening pursuant to the written consent of all members, and the effective date. The document should be filed by mail; the fee is $30 as of 2010.
Send written notification of dissolution to known creditors of the LLC. The notification must describe information that must be included in a claim of money owed, provide a mailing address where claims may be sent, state a deadline that is at least 120 days from the date of the written notice and state that the claim will be barred if not received by the deadline. North Carolina law bars creditors from making claims against the dissolved LLC if they don't respond by the deadline.
Publish a notice of dissolution in a newspaper of general circulation and request that persons with claims against the LLC present them in accordance with the notice. The notice must be published one time in the county where the dissolved LLC's principal office was located. It usually must describe the information that must be included in a claim, provide a mailing address where the claim may be sent and state that a claim against the LLC will be barred unless a proceeding to enforce the claim is brought within five years after the publication of the notice.
Tips & Warnings
- The notification requirements of Steps 4 and 5 are optional. However, if an LLC dissolves without providing notice to known and unknown creditors as specified by North Carolina law, the members of the LLC may be held personally liable for any subsequent debts of the company that arise after dissolution.
- Dissolution is only one aspect of closing down a business. Remember to make final withholding payments to the state if the company had employees, to close the company's account with the state taxing authority and to file final tax returns with the state and federal government.
References & Resources
- North Carolina Department of the Secretary of State: Corporations Division
- North Carolina Limited Liability Company Act: Dissolution
- Citizen Media Law Project: Limited Liability Company
- Business.gov: Closing a Business
- FindLaw: A Road Map to Closing Down Your Business
- FindLaw: Checklist for Dissolution and Winding Up
- SCORE: Business Tools
- U.S. Small Business Administration: Small Business Planner
- North Carolina Articles of Dissolution
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