how to close out a llc [Expert Answers]

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Last updated : Sept 26, 2022
Written by : Clara Carmickel
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how to close out a llc

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how to close out a llc

Comment by Lynnette Somerset

hey guys this is robert with malawi law we help entrepreneurs just like you start their businesses without dealing with the complicated legal forms and we are also the number one highest rated business law firm for entrepreneurs with more than fifteen hundred five star google reviews today we are going to talk about whether you should dissolve your llc if you are no longer using it and whether you can put your llc on hold to avoid paying fees so many of our clients formed llc's in the past and they no longer use them and they wonder if they should dissolve it or not they also realize that they have been getting notices from the state informing them that they owe money despite the llc making no money or even operating at all and for our clients they're wondering if they have to pay these fees or the money to the state so in this video i'm going to address both of these questions so let's get started also keep in mind that unlike sole proprietorships where p where there is not a whole lot you have to do to wind up the business or close the business with llc that's a little bit more complicated and you'll likely have to file some documents with your secretary of state so first let me inform you that dissolving your business is another name for closing or shutting down your business so to begin or so to begin let me explain that one of the common reasons people choose to dissolve their llc's when they are no longer conducting business is to avoid paying the annual state renewal fees to keep the llc active if your llc is no longer conducting business then you can't just simply do nothing and you can't just not pay the state the annual fees if you do do this then the state may continue to charge you the annual fees and may even charge you interest on certain fees that they have not been paid eventually the state will also suspend your llc and you will continue to rack up these fees and once this happens then the state will not let you officially dissolve the llc until all taxes and fees have been paid so in reality you will just continue to incur the annual state fees until you pay the state what it is owed and properly dissolve the llc for example some states such as delaware will charge you a 200 late fee and will also charge you interest if you don't pay the franchise tax fee so in order to avoid these late fees and penalties and potentially the interest fees then it is important to officially dissolve your llc the right way and in accordance with your state's requirements so ultimately there is no need to be alarmed if your llc has been inactive but be sure to not wait too long to dissolve it otherwise you risk having to pay hefty fees to your state of incorporation so now you're probably wondering how to properly dissolve your llc and generally dissolving your business just involves filing a form to the business division of your state's secretary of state's office the state may also require that you pay the state fee and send payments along with the dissolution documents for some states there is no charge and for others the fee can be hundreds of dollars it is important to check with the business division at your secretary of state's office to find out the exact procedure so overall don't get too overwhelmed if you're in this situation but keep in mind that you shouldn't wait too long if you are no longer using your llc then it is important to dissolve it so that you can avoid getting hit with many of the fees and potential interest payments also some states won't let you officially dissolve the llc until you pay everything that is owed to them so it is important to not just let your llc incur fees each year because eventually the state will try to collect the money from you so if you're an entrepreneur looking to dissolve your business or start a business in the united states then click on the link below to schedule a free consultation with us during the phone call we will be able to determine your specific requirements to dissolve the llc in your state and we will explain the advantages of doing so and we can also determine if you should keep your llc opened and just use it for a different business purpose so go ahead and click the link below and also if you have any questions just post them below and my team and i will try to get to them as soon as possible i'll see you guys in the next video

Thanks for your comment Lynnette Somerset, have a nice day.
- Clara Carmickel, Staff Member

Comment by Cyndi

hi everybody I'm attorney Aiden Kramer with the law office of Aiden Kramer in Colorado and you're watching all up in your business in this episode of all up in your business I'm gonna talk about how to dissolve an LLC how to dissolve shut down clothes and LLC whatever you want to call it it's what I'm gonna talk about maybe you started a business and you realize that being a business owner just isn't for you or maybe you started a business with some partners and you realize that your partners are just a couple of turd bags whatever the reason behind it there are a few steps that you need to take to dissolve an LLC first things first as with most things having to do with your LLC check your operating agreement your operating agreement might describe how when or the process by which the LLC can be dissolved if you don't have an operating agreement or if your operating agreement is silent on the issue then you want to check the statutes in your state because every state is going to have a statute that describes how to dissolve an LLC or what requirements there are for doing so Colorado for example requires that all of the members consent to the dissolution so in Colorado if you have an LLC with multiple members all of the members are going to have to consent to it if you all want to voluntarily dissolve the company and then depending on the requirements of your operating agreement or your state's laws you're most likely going to need to have some kind of a vote or some kind of a written documentation that all of the members have consented to this even if you're the only member you as the one member have to consent to dissolving the company and you want some sort of written documentation of that so whether it's a formal meeting with you and the other members or just a written document saying that you as the only member or the group of you as all of the members have agreed to dissolve the LLC you want to make that documentation once everybody is in agreement on it then you want to start paying off any debts of the company if there are outstanding debts creditors that still need to be paid off those need to be paid before you make any final distributions to the members you're also going to want to check your operating agreement and/or your state statutes because there might be some sort of priority of who gets paid off for example if one of the members made a loan to the LLC typically a member who is a creditor is going to be paid off after other creditors that priority to pay off a member who made a loan to the LLC is going to be lower than the priority of paying off a bank if your company doesn't have any debts there are no creditors then at that point what's that's all taken care of you can make the final distribution so for simplicity's sake let's say there are two members and there's $1,000 left in the company all of the company's assets are $1,000 in the bank and you each own 50-50 of the company then that final distribution is going to be five hundred to one five hundred to the other then you're gonna want to file the dissolution paperwork with your state in Colorado this is called a statement of dissolution other states might call it something else but every state is going to have some paper that you need to file to dissolve the LLC officially with the state and then lastly you're gonna need to wrap up the LLC's taxes just because the LLC is dissolved doesn't mean you get out of paying taxes for that last year so you need to whenever your tax time comes up whether it's in April or you have a different tax year you file that final tax return pay whatever taxes you owe to the IRS and whomever else and then on that tax return you can indicate that this is going to be the final tax return of the company so for most companies that's going to be basically the process of dissolving the LLC for some situations that might be more complex so because of that it's always good to work with an attorney when you're trying to dissolve an LLC a special if there are multiple partners if you're a single member LLC you're the only owner the process is a bit easier and it's really easy if you don't have any debt then there's really nothing to worry about but either way at least checking with an attorney who's licensed in your state to assist with the dissolution is going to be a good idea if you're in Colorado and want some assistance dissolving your LLC or anything else having to do with your LLC please feel free to contact me my phone number and email are right here please be sure to give a thumbs up and subscribe to my channel if you want more all up in your business I put out new videos on Wednesdays usually sometimes it's not on Wednesdays but usually it's on Wednesdays but if you subscribe you won't miss a video regardless and when I put it out thank you all so much for watching I'm Aiden Kramer and I'll see you next time

Thanks Cyndi your participation is very much appreciated
- Clara Carmickel

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