Sometimes a business venture just runs its course, and you realize that it’s time to close down. Sole proprietors can basically just close their books and close their doors, but when you’re operating a limited liability corporation (LLC), you have to take a few more steps. That’s because an LLC is a legal entity that is distinct and separate from the members that operate it.
If you and the other members of your limited liability corporation (LLC) realize that it’s time to move on, for whatever reason, it’s important to have a good understanding of the process that you need to follow. Here are some of the basics.
You have to go through the “winding up” stage
The first thing you need to do is check the LLC’s operating agreement. It may provide some direction that will provide clarity about
Ultimately, to voluntarily dissolve your LLC, you will need to file a Certificate of Dissolution with the Secretary of State, along with the appropriate filing fee ($50).
However, there are a number of things that you and the other members of your LLC need to accomplish before you’re finally done. This is known as the “winding up” phase.
Some of these things may need to be done before the Secretary of State approves the dissolution, while some will have to be done after – even though the business is no longer in operation. They include:
- Paying off any final debts
- Selling or liquidating any company assets
- Canceling all business permits or licenses with the appropriate authority
- Paying any final federal, state or local taxes
- Closing the IRS EIN account associated with the LLC
- Closing the LLC’s bank accounts
- Carrying out, transferring, or terminating any contracts that are still in effect
- Distributing any leftover company assets to the members
Properly handling all of the moving pieces in your LLC’s winding-up phase can help to protect you and the other members from potential legal and financial liabilities. That’s why it’s wise to seek experienced legal guidance so that you don’t miss a step or make a critical mistake.