Dissolving an LLC
Keeping this in consideration, dissolving an LLC starts the process of closing a business. However, it must be according to the operating agreement. There are different reasons why an LLC may decide to dissolve. When you file to dissolve your LLC in a state, it is called dissolution. On the other hand, it is termed as termination when the state cancels or terminates your company from the state. Depending on how long you’ve been in business and whether you have the consent of all LLC members, different form(s) may be necessary. Following that, you’ll need to take a few actions to get things moving, including alerting any relevant governmental bodies, filing your final tax returns, and alerting your creditors.
Dissolution vs. Cancellation
Dissolution is the winding up of the affairs of the entity in advance of the termination of the entity. While both steps are required, they are not the same thing. Dissolution and Cancellation are different. Dissolution is the legal process of terminating an LLC, while cancellation occurs when a business license or permit issued by the state is revoked because of noncompliance with regulations or statutes.
Closing an LLC
- The Close LLC designation is for single-member LLCs and when members are close, i.e. family and friends.
- Members won’t receive returned capital unless all consent, the company dissolves, or the operating agreement specifies it.
To close an LLC, file Articles of Dissolution or Cancellation. Settle state taxes and fees. Properly closing an LLC protects from liability and withdraws remaining assets. Read the operating agreement beforehand.