Each state’s LLC laws require the filing of a document, referred to variously as articles of dissolution or certificate of dissolution, to dissolve an LLC. Filing the required document is relatively easy and does not require a lawyer’s services. You can obtain a dissolution form from the state agency that authorizes LLC formations, such as the secretary of state, which will include instructions on completing and filing the form. Filing this document prevents the LLC from continuing to incur such expenses as state-imposed annual fees and taxes; however, this does not mean that your LLC no longer exists, and further action that may require a lawyer’s services may be needed to properly wind-up the LLC's affairs.
The precise steps that need to be taken to wind-up the LLC’s affairs will vary greatly from one situation to another, depending on the legal requirements of the state where the LLC was formed and the type of business activity that was engaged in by the LLC. For example, some states require obtaining a tax clearance certificate from the state’s taxing agency to verify that the LLC has filed all state returns and paid taxes. If the LLC was a party to a lawsuit or even threatened with legal action, the LLC will still be subject to the legal proceedings regardless of the fact that a certificate of dissolution was filed. The LLC will have to pay its remaining creditors and distribute remaining assets among its members. If the LLC was engaged in any significant amount of business, a lawyer’s services will almost certainly be necessary to ensure that the remaining matters involving the LLC are adequately resolved.
A lawyer's service are advisable in situations where there is disagreement among the members regarding the operation and dissolution of the LLC. The right of any one member to dissolve the LLC may be limited by state law or an operating agreement made between the members. For example, a member of a New York LLC may find that he cannot dissolve the LLC -- even when the members disagree about how to run the business -- unless there is an operating agreement specifying a right to dissolve. In the absence of a specific provision in the operating agreement giving the member a right to dissolve the LLC due to disagreements, New York LLC law applies by default -- and since there is no such right in the law, the member cannot dissolve the LLC.
Abandoning LLC Operations
Although dissolving and winding-up an LLC's affairs may prove more difficult than expected, you should not simply abandon an LLC when its business purpose may have become frustrated or simply ends. Without taking the proper steps related to dissolving the LLC, state fees and taxes, as well as penalties, will continue to be incurred. When these obligations go unpaid, the LLC will be administratively suspended by the state, and will be legally prohibited from acting in important situations such as defending against a lawsuit. Also, such circumstances may result in the members becoming personally liable for the LLC’s remaining debts. The Miller Nash law firm advises to obtain the services of a lawyer in order to properly dissolve an LLC in all cases, but particularly where there are difficulties.