If you are a member of an LLC, you cannot just walk away. In order to avoid unexpected expenses later, you’d want to formally close the LLC. Many States require LLCs to pay annual fees. If you don’t close your LLC, your state may continue to charge you taxes, fees, and possibly late fees.
Let’s first answer whether a business owner can just walk away from an LLC without any problems. Assuming that the founder has not personally guaranteed the LLC’s obligations and has done nothing else to compromise the LLC’s limited liability protection (see Beware Your Alter Ego), the answer probably is “Yes, you can walk away.” This is not what the law prescribes, but it is a practical solution that countless people choose every year.
Winding up a Solvent Company
The deregistration process is crucial as a company will be required to pay annual review fees and continue to be subject to the legal requirements of a registered company.
The sort of company you manage determines whether you can just walk away from it. Closing an LLC is not as simple as locking the door and walking away. There are several steps you must take to protect yourself from liability and withdraw remaining assets from the company.
If you opened a limited liability company (LLC), you can’t just walk away if it doesn’t work out. You need to make the effort to formally close the LLC if you don’t want to be hit by unexpected expenses later.
Dissociating from an LLC
How do I disassociate myself from an LLC? If you are a member of an LLC, you cannot just walk away. There are procedures to follow that include methods of notification of the remaining membership, how assets are handled, and what the provisions of withdrawal are for each LLC.
Tip: If you don’t close an LLC, your state may continue to impose taxes, fees, and late fees on the company.
Otherwise, you can start operating your LLC after filling out the late fees and penalties of the state requirements. This article will explain what you can do with your inactive LLC and the outcomes.
The general rule is that members of an LLC enjoy limited liability and cannot be sued personally for activities or debts of the LLC.
Before dissolving an LLC, get tax and legal advice. Check on your Buy-Sell Agreement which sets out the rules for when they dissolve or when an LLC member chooses to move on.
How do I disassociate myself from an LLC? The best road forward is for all members to try to stay on friendly terms and come to an amicable agreement in line with the Articles of Organization or relevant state laws. Keep the lines of communication open between all members and be honest.
Filing for Dissolution
As an LLC owner, you are legally required to file annual reports, pay yearly fees, and minimum taxes. These will stack up, along with their late fees, until you take the necessary steps to dissolve an LLC.
Step 1: Voting on Dissolution. If you are the sole member of your LLC, then you skip this. Otherwise, all LLC members must vote on dissolution before any action is taken.
Step 2: Filing for Dissolution. Depending on your state’s rules, this step could either come second or last.
Formally dissolving an LLC puts an end to annual report and fee requirements. It also gives creditors notice that the LLC can no longer take on debts.