Dissolving an LLC – Reasons, Procedure, and Requirements

Whatever you plan for your business will never go in the same manner. Hence one moment comes when you have to dissolve your company. The one main reason behind dissolving your company could be an economic failure. However, it is a major but only the cause. What if a business is unable to pay any tax? Hence if you want to dissolve a minimum liability company, here are various steps to follow.

There is one proper way to dissolve an LLC, but it might differ from one state to another. You need to understand how to dissolve it because broad strokes are the same in all.

What is the Right Procedure for Dissolving an LLC?

If you are planning for dissolution, that does not mean immediately turning down a business. There is a complete procedure to be followed step by step if your company has such an operating agreement.

  • The very first step for dissolution is to get your members to vote for dissolution if they want or not. It is possible if your company agreement says dissolution occurs with voting. Don’t forget to get the decision of members in the written form to avoid further disputes.
  • Informing your creditors is the very next step to take. Tell creditors that you are going to turn your business down. You can even ask them to submit claims within the stated time. Generally, the submission period lasts from 90 to 180 days.
  • Now comes filing articles at the state level, say contacting the Secretary of the State. Also, you can reach indirectly by contacting local tax authorities first. They will keep a check if your business is not undergoing any unpaid taxes.
  • Now comes canceling your business license. Also, keep a check on outstanding fees, if any.
  • You also need to handover the original LLC formation with the state agency to the Secretary of State if you are contacting them.
  • The forms, procedure to file, the fees that you pay will vary as per state demands.
  • You might also need to undergo a complete written check for no pending taxes if a state procedure demands it.

In all, you need to be very precise with your decision and documents before you are reaching any state agency to dissolve an LLC.

Why is There a Need Dissolving a Limited Liability Company?

A founder will not dissolve a company with his will. It could be a big reason behind such actions. Reasons can be many legal or economic and also some personal reasons. However, there comes a time when you have to take such actions. Some situations when it’s time to dissolve an LLC are:

  • Unmanaged company status
  • Worst economic health
  • Accounting practices having a fault.
  • Unable to pay taxes
  • Bankruptcy
  • Not so good quality products introduced.
  • The company face challenges to work as planned before


There are situations under which a person feels it is important to dissolve the company. A court can also put on orders for dissolution if it does not work according to state laws. Thus, eventually, if you plan to dissolve, then learn state laws first. Laws are written according to setting up an average company. It is some fault on our side that sometimes it is challenging to cope up.