Can I Use a Bank Account After Dissolving an LLC?

By Christine Funk, J.D.

Can I Use a Bank Account After Dissolving an LLC?

By Christine Funk, J.D.

Whether the use of a limited liability company (LLC) bank account is proper or improper after the LLC has dissolved depends on the purpose of the use. It is entirely appropriate, for example, to use the LLC bank account for final LLC business. It is not appropriate, however, to use an LLC bank account for a different, newly formed LLC.

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The Beginning and End of an LLC's Life

Each state has its own requirements for forming and dissolving an LLC, but most states require filing certain forms on each occasion. When it first forms, an LLC must file this paperwork with the state agency that regulates businesses where it intends to operate. The paperwork generally includes the articles of organization, which provide detailed information about the purpose of the LLC, the identity of the registered agent, and the address of the LLC.

When a person or partners decide to dissolve an LLC, they must file articles of dissolution, also called articles of termination, with the same state agency with which they filed formation paperwork. Filing this document with the state establishes the date the company ceases to exist. LLCs have the option to file the paperwork with a later end date or wait until all LLC business is taken care of and then file the paperwork with the state.

An attorney can help an LLC's owners, called members, address the issues relevant to their business and their state. Alternatively, a business owner may seek the assistance of an online service provider to dissolve their LLC.

Wrapping Up an LLC's Affairs

LLCs are afforded a "reasonable amount of time" to wrap up business affairs. This includes paying debts, paying taxes, and dealing with any pending lawsuits. The bank account must remain open until the LLC has addressed all of these. LLCs must put aside money to cover any claims of creditors that do not resolve in their favor after the filing of the articles of dissolution. When an LLC fails to set aside an amount to cover creditor claims, the creditor may pursue the assets of individuals who were part of the LLC and assets distributed during the closing of the LLC.

Using an LLC Account for New Business

Once an LLC dissolves, it is not appropriate for it to engage in new business. Further, it is not appropriate to use the LLC account for business not associated with the old LLC. The account is only for taking care of official LLC business.

Consider the example of a single member of an LLC who decides to terminate the business. After paying all taxes and outstanding bills and when there are no lawsuits pending, the member of the LLC may pay out the balance of the account to himself. The member is then free to use those funds as he chooses. He may choose to start a new LLC with another name. This is fine as long as he deposits the funds in a new account under the new LLC's name. The member may not simply leave the funds in the old LLC bank account and begin using the funds for other business or personal reasons.

Using an LLC's bank account after its dissolution is strictly for winding up its affairs, such as paying taxes and debts and distributing remaining funds to members. Any other use of the account, especially for a new business, is not appropriate.

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.