Are you thinking of closing your LLC but don’t know what will happen if you don’t? In this article, we’ll explain the consequences of not dissolving an LLC and the best way to go about it.

What Happens If You Don’t Dissolve An LLC?

If you don’t dissolve an LLC, the state may continue charging taxes, fees, and late fees. This can be costly and can even lead to legal liability. If the LLC has existing contracts or leases, it will remain responsible for them and the members may be sued. To avoid this, you need to officially dissolve the LLC and distribute its assets to the members. Under Corp C §17707.07(a), the members can be sued if the LLC is not properly dissolved. If you don’t dissolve the company properly, you could also be required to pay annual fees to the state. In other states, you will only be charged a fee if the LLC is still active. Also, if the LLC’s partners do not properly dissolve it, each partner will still be liable for the partnership’s obligations.

How To Dissolve An LLC?

The steps for properly dissolving an LLC vary from state to state. Generally, you should:

  • File articles of dissolution with the state.
  • Notify creditors and other parties that the LLC is being dissolved.
  • Pay or settle all debts and liabilities.
  • Distribute remaining assets to members according to operating agreement.

Failing to dissolve your LLC can leave you open to personal liability. If the company still exists with the state, you’ll be responsible for filing annual reports and taxes. It’s important to dissolve your LLC properly in order to avoid any of these risks.

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Is it advisable to terminate an LLC that has never been utilized?

Even if a company is not actively operating, it is still necessary to formally dissolve it in order to avoid any personal responsibility for any taxes, fees, or other payments owed to the government by the limited liability corporation.

What is the process for terminating a single member LLC with the Internal Revenue Service?

7
Cancel Your Business Licenses and Permits.

1
Submit a Final Tax Return and any other forms associated with it.
2
Address Your Employees.
3
Settle Any Taxes Owed.
4
Notify Contract Workers of Payment.
5
Terminate Your Employer Identification Number and Shut Down Your IRS Business Account.
6
Maintain Your Records.
7
Annul Your Business Licenses and Authorizations.

What occurs to the Employer Identification Number when the Limited Liability Company shuts down?

The EIN will stay connected to the business and can be utilized again if necessary.

Why is a company being dissolved?

Business dissolution can be brought about in various ways, such as not filing yearly reports or not paying taxes due in the state where the company was set up, bankruptcy, and also by the decision of the business owners to voluntarily dissolve the firm.