How Can a Limited Liability Company be Dissolved?
If you would like assistance in dissolving your Limited Liability Company (LLC), a business succession planning lawyer, like a business succession planning lawyer in Sacramento, CA, can ensure that all legal requirements are met in doing so, and that your personal liability is reduced or eliminated. Though this may be a stressful and emotional chapter in your professional life, many of the formal details involved in dissolving your LLC can be handled by a skilled business lawyer. This includes lawfully dissolving the LLC in the state where your company is registered as well as formalizing a dissolution agreement between yourself and the other company owners.
A good business lawyer will make sure that there are no “loose ends” so you can feel confident that the dissolution of the company will be complete. Without thorough knowledge of this legally-binding process, should you not hire a business lawyer, you put yourself at risk for incurring substantial tax penalties. This may hold true even if you did not earn income and there is not currently any owed taxes. Simply filing your company’s federal tax return late, which incurs a tax penalty of $195 for each portion or full month past the due date, up to twelve months for every managing member of the company.
Without a Dissolution Agreement for Your LLC, You Are at Personal Risk
Should the LLC not be formally dissolved, as far as the federal, state, and municipal governments are concerned, the company is still in existence. This puts you at risk for incurring personal liability should another partner in the business break any laws that can be traced to the company. Additionally, another business partner could later file a lawsuit against you to recover damages that they claim you were responsible for because of your actions that harmed them and/or the company.
The Steps for Dissolving an LLC
The steps to dissolve your LLC are contingent on a number of factors, which are current laws that are subject to change. A business lawyer would work closely with clients to make sure that all requirements are met in full. Here is a general guideline for dissolving an LLC:
- If there is an existing operation agreement for the company, its instructions for dissolving the company must be followed. This may include payment of company debt and the distribution of company assets.
- Draft, negotiate, and finalize a dissolution agreement between the company’s owners if there is not one already in existence.
- Formally notify the Internal Revenue Service (IRS) of the LLC’s dissolution using the proper forms which can be provided by a business lawyer when handling your case. This must be completed within 30 days of terminating your company.
- Submit the articles of dissolution to each of the required and appropriate legal entities such as the state in which the company was registered and any foreign states as applicable and indicated by your business lawyer.
- Submit the final tax forms with full payment (if applicable) to the IRS and the state’s tax authority.
Get Help to Dissolve Your LLC
Call an attorney today to discuss your case with an experienced business lawyer.
Thanks to Yee Law Group, PC for their insight into dissolving an LLC.