How to Undo an LLC

By Salvatore Jackson

A limited liability company, or LLC, is a popular business structure among small business owners. An LLC is created once an individual submits a document, often called an articles of organization, with a state business licensing agency. The only way to undo the creation of an LLC once the LLC’s articles of organization have been accepted is to file another document, usually called an articles of dissolution, with the state business licensing agency.

Step 1

Conduct a vote among LLC members to dissolve the LLC. If your LLC has an operating agreement, follow any voting provisions set forth in that document pertaining to dissolution. If your LLC does not have an operating agreement, state LLC statutes typically require a unanimous vote of LLC members.

Step 2

Obtain and file a notice of winding up. If your LLC has contracts with other companies, you'll need to give those companies notice that your LLC will be ceasing operations. The state agency that registers business organizations typically provides these forms for you to fill out and send to the appropriate companies.

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Step 3

Wind up the affairs of the LLC. If the LLC has entered into any contracts, these contracts must be “wound up” before the LLC can be dissolved. Any assets owned by the LLC must be sold. Proceeds from the sale of LLC assets must be used to pay creditors of the LLC. If any proceeds are left after creditors are paid, LLC members receive the remainder.

Step 4

Obtain an articles of dissolution form from the state business licensing agency. These forms are sometimes provided online by state agencies.

Step 5

Fill out the articles of dissolution form. While state requirements vary, you will typically need to provide the name of your LLC and the date of dissolution. All members of your LLC must sign the articles of dissolution form.

Step 6

File the articles of dissolution form. It may cost up to about $25 to dissolve an LLC, though some states do not charge a fee at all. The articles of dissolution form must be filed with the state business entity registration agency.

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How to Liquidate an LLC
 

References

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How do I Dissolve LLC in State of Michigan?

Under Michigan law, all limited liability companies must register with the Michigan Department of Energy, Labor and Economic Growth, or DELEG, in order to conduct extensive business within Michigan. Registering an LLC with the DELEG involves filing a document, called an Articles of Organization, which becomes a public record. To dissolve a Michigan LLC, you must file a document, called a Certificate of Dissolution, to amend the public record about your company. You must also obtain a Tax Clearance Certificate from the Michigan Treasury.

Can a Creditor Collect if an LLC Is Dissolved?

Circumstances might arise under which a creditor can collect debt from a dissolved limited liability company. As such, it is essential for business owners to follow the steps necessary to properly dissolve the company and be aware of situations where creditors may collect distributions that have already been allocated to LLC members.

How to Cancel an Incorporation

When a business incorporates, it becomes a distinct legal entity. The corporation’s liabilities are its own; its shareholders are generally not personally responsible for those obligations. The incorporation is also required to file its own tax returns. Due to its legal independence, cancelling corporate status requires filing documents with a number of organizations. Businesses incorporate under state law, so the specific steps for dissolving the organization will vary. Check the laws of the state where the business is incorporated for the exact process your corporation will have to follow.

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