Can I Dissolve an LLC Without a Lawyer?

By Tom Speranza, J.D.

Can I Dissolve an LLC Without a Lawyer?

By Tom Speranza, J.D.

A limited liability company (LLC) is a business entity that you can form in any of the 50 states. In most situations, LLCs dissolve, or end their legal existence, when they approve a decision to dissolve by a required vote of the members—the LLC's owners—and file a certificate of dissolution with the state office that administers entities formed or registered in the state, usually the Secretary of State.

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Retaining a Lawyer

Whether you should retain a lawyer to complete a dissolution of your LLC depends on your company's particular situation. As a general rule, an LLC with a longer operating history, several employees and contractors, significant assets and liabilities, and contingent obligations may require a lawyer to complete a dissolution and final winding up of the company. The members of a simpler LLC with fewer assets and liabilities and a shorter operating history can more easily handle the dissolution and winding up process without legal assistance.

Ending the LLC's Existence as an Entity and Taxpayer

Terminating the LLC's existence as a legal entity and taxpayer is relatively simple. Although each state has slightly different procedures, the steps involved are mostly similar.

1. Review operating agreement.

A well-drafted LLC operating agreement spells out requirements for member or manager votes or approvals to begin the dissolution process. Typically, those members who collectively own at least 51 percent of the membership interests, or a majority of the equity, must approve the decision to dissolve, but it's not unusual for operating agreements to set a higher supermajority approval threshold as a way to give minority owners some input.

The member vote for dissolution can take place at an in-person meeting or by the members signing a written consent.

2. Check default dissolution rules under LLC statute.

If the LLC does not have an operating agreement or if the document does not include a process for dissolving the company, the company must follow its state LLC laws. For example, in the absence of guidance from an operating agreement, Delaware law requires a vote in favor of dissolution by those members owning at least two-thirds of the membership interests.

3. File Certificate of Dissolution or Cancellation.

After approving the dissolution, the members file a Certificate of Dissolution, known as a Certificate of Cancellation in some states, with the Secretary of State or equivalent office.

4. Terminate the LLC's existence in other states.

If your LLC does business or is registered in other states, it must also terminate its legal status as a registered LLC in those states. After filing the Certificate of Dissolution in the LLC's formation state, you must file a Certificate of Withdrawal, sometimes called a Certificate of Termination, in each other state where the LLC is qualified to do business as a foreign LLC. A business lawyer can be helpful with the drafting of the certificates and the filings, especially if the LLC must file for dissolution or withdrawal in several different states.

5. Pay final state tax obligations.

A state does not consider your LLC completely dissolved, canceled, withdrawn, or terminated unless it settles all outstanding state tax obligations. In conjunction with the filings ending the LLC's legal existence, you must contact the revenue department of each state to:

  • Notify the state of your LLC's dissolution or withdrawal
  • Determine the process for calculating and paying the final amounts owed for sales tax, franchise tax, income tax, and any state-mandated employee payroll deductions

State revenue departments have a separate set of documents and filings that an LLC must complete to end its existence as a taxpayer. The issuance of a final tax clearance certificate—the formal document most states issue when all outstanding tax obligations have been settled—can sometimes take more than a year because it often takes a few months to complete final income, sales, and employer tax returns after filing the dissolution documents with the state agency that regulates businesses.

An experienced tax lawyer and your LLC's accountant are valuable resources when dealing with state tax authorities.

Winding up the LLC's Business

Ending the LLC's status as a legal entity and taxpayer is just part of the dissolution process. State LLC laws also require a dissolving LLC to wind up its business affairs by:

  • Appointing a manager or trustee to wind up the LLC's business
  • Conducting an inventory of all LLC assets and liabilities
  • Converting the LLC's assets to cash by liquidating them
  • Paying the LLC's creditors
  • Establishing reserves for contingent liabilities
  • Distributing any remaining assets to the LLC's members

If an LLC's assets are not sufficient to pay all creditors in full or if the LLC has complicated contingent or other future liabilities—such as pending litigation involving the LLC—an experienced business lawyer can provide advice about the winding up process to protect the members from personal liability.

This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of author, not LegalZoom, and have not been evaluated by LegalZoom for accuracy, completeness, or changes in the law.