Forming a limited liability company, or LLC, creates a separate legal entity for your business. The primary reason to form an LLC is to shield you from the debts and liabilities incurred by the business. Your LLC will continue to exist until it is terminated according to the requirements of your state’s LLC laws. In some states, you can set the termination date at the time you form the LLC.
An LLC Can Exist Perpetually
An LLC is commonly described as a hybrid between a corporation and partnership -- that is, an LLC provides liability protection for its owners like a corporation does, but an LLC’s management structure is less formal and more flexible than a corporation's -- in this regard, an LLC is more like a partnership. LLCs, like corporations, continue to exist despite a change in ownership. This means that an LLC can perpetually exist without a termination date.
Pre-Planning the LLC Termination Date
Every state has enacted LLC laws, which in general are influenced by the Uniform Limited Liability Company Act created in 1994 and revised in 2006. To form an LLC, all states require you to file a document, typically called the LLC’s articles of organization or certificate of organization, with a state agency. This document requires some basic information about the LLC, such as the name and address of its principal place of business, and may also include other information about the LLC. Most states give you the option of specifying a term of existence -- for example, 25 years -- or a specific termination date in the articles or organization.
Voluntary Termination of the LLC
Without a termination date specified in your LLC's articles, you can voluntarily terminate your LLC as provided by your state's LLC laws. Termination will typically involve filing a document, such as a certificate of dissolution or cancellation, with the same state agency with which you filed the LLC's articles. Determining the LLC's termination date will depend on when you make your decision to terminate the LLC and the state's requirements for filing a certificate of dissolution or cancellation.
To file the appropriate document to terminate your LLC, you must comply with your state's legal requirements and follow the provisions of any agreement between you and any other LLC members. For example, some states have different filing requirements depending on whether the members are unanimous in the decision to terminate the LLC, such as in California. Most states, such as Nevada, require that the affairs of the business be wound up and remaining liabilities provided for before articles of dissolution can be filed. Some states require action after termination, such as Michigan, which requires that an LLC request a tax clearance certificate from the Michigan Department of Treasury within 60 days of filing a certificate of dissolution.