Posted October 31, 2017
| Updated May 23, 2022

Dissolve an LLC With These Six Easy Steps

For a variety of reasons, entrepreneurs may decide to close the business they worked so hard to start and grow. Situations change and the need to dissolve an LLC or corporation may need to be addressed.

An entrepreneur can grow tired of small business ownership or may simply want to retire. Possibly the business has been losing money or it isn’t as profitable as it needs to be. Regardless of the reasons, an LLC needs to be dissolved in a formal and methodical manner.

This task doesn’t have to feel daunting. Our six easy steps will provide a guide for closing a business within the necessary rules and guidelines.

How to Dissolve an LLC

While corporations can be rather complicated to end, it is less involved to dissolve an LLC. Still, you need to follow the rules. LLCs are formed under state law, therefore the provisions for retiring an LLC also fall under the authority of the state. Many states have similar rules for breaking up an LLC, but there are differences. In addition to state requirements, an LLC must also follow the dissolution provisions within its operating agreement. I encourage you to talk with your attorney to make sure you understand what you need to do to legally cancel your LLC in the state (or states) in which your business is registered.

In the meantime, let’s visit some of the common steps involved. This information is in no way a substitute for legal counsel, but it will give you a preliminary understanding of your obligations if you decide to close your business.

Six Easy Legal Steps for Dissolving a Limited Liability Company

1. If you have a multi-member LLC, hold a vote with all owners (members) to confirm approval of the dissolution.

Depending on state law and the rules outlined in your operating agreement, your LLC may require a majority vote or unanimous consent to approve dissolution.

2. File Articles of Dissolution (sometimes called “Certificate of Termination”).

You will need to file this document with the Secretary of State’s office where your LLC was established. Because every state has its own rules for closing a business, you should review your state’s requirements. If your LLC was registered in multiple states, you will need to find out the specific rules in each state where you’re doing business.

3. Notify creditors and take care of any outstanding business debt.

Before an LLC can legally distribute money or assets to its members, it will typically need to settle its debts. Let your creditors know by mail that you are filing to dissolve your business, and give them instructions for submitting claims if they believe you owe them money. Your company can accept or reject creditors’ claims. When you accept a claim, you must either pay it in full or negotiate a satisfactory repayment arrangement. You must notify creditors in writing if you reject their claims. Ask for the guidance of an attorney as you navigate the process. Legal counsel can also help you explore your options if your company doesn’t have adequate resources to pay its debts.

4. Cancel business licenses and permits.

Depending on the nature of your business and where it’s located, you may have needed federal, state, county, or municipal licenses and permits to operate legally. Some examples of the possible business licenses or permits different companies may need to cancel include:

  • Seller’s permit
  • Business registration license
  • Zoning permit
  • Professional licenses (such as accounting)
  • Food and beverage license
  • Salon license
  • Or others

Notify the appropriate offices that you will no longer be doing business, so they don’t continue to assess fees to your company.

5. File your final tax returns for the year in which you close your business.

On your tax form, check the box that indicates it is a final return. If you have employees, you must also make your final federal tax deposits and file final employment tax returns. You must also report business property disposed of and any like-kind property (of the same nature, character, or class) that you exchange. You can find specific instructions on the IRS website.

6. Distribute your company’s remaining assets.

If your LLC has multiple members, you may distribute the assets left among you after you have paid your business debts. Refer to your LLC operating agreement for details on how your company should divide assets among your LLC members.

The Importance of Staying in Good Standing

Be aware that some states will not allow you to dissolve an LLC if you owe back taxes or otherwise have fallen from good standing with the state. Before your request to dissolve your business is honored, you may need to take steps to remedy whatever issues the state has with your company.

Closing a Business Involves More Than Just Legal Formalities!

At some point during the process, you should inform your customers, vendors, contractors, suppliers, and project partners of your plans to dissolve your business. It’s the right thing to do. Your loyal customers may need some time to find another company who can provide the same services, products, and level of professionalism that they got from you. And after you stop ordering from your vendors, contractors, and suppliers, they will have to look to fill the revenue void. Your project partners, who have built rapport and trust with you, will also have a hole to fill. While none of the above will be pleased that you’re closing your company, they will appreciate some advance notice so they can figure out what to do after your business goes dark.

Wrap It Up Right

No matter what reason you have for dissolving your LLC, I recommend that you consult an attorney to make sure you have all your ducks in a row. And make sure you file the necessary paperwork promptly. If you don’t, you could get hit with legal issues and unanticipated costs.

As long as your business is considered active in the state records, you’ll be responsible for compliance requirements, taxes, licenses, etc.—even if you’re no longer selling your products and services. The longer you wait to officially cancel your LLC with the state, the more costs and headaches you’ll face.

Fortunately, you don’t have to get bogged down with the paperwork if you enlist the help of my team at CorpNet.

If you need to dissolve an LLC, we can handle filing your dissolution documents for you. When you work with us, you gain peace of mind that your business filings are done accurately and on time. Contact us today to get started!

<a href="" target="_self">Nellie Akalp</a>

Nellie Akalp

Nellie Akalp is an entrepreneur, small business expert, speaker, and mother of four amazing kids. As CEO of, she has helped more than half a million entrepreneurs launch their businesses. Akalp is nationally recognized as one of the most prominent experts on small business legal matters, contributing frequently to outlets like Entrepreneur, Forbes, Huffington Post, Mashable, and Fox Small Business. A passionate entrepreneur herself, Akalp is committed to helping others take the reigns and dive into small business ownership. Through her public speaking, media appearances, and frequent blogging, she has developed a strong following within the small business community and has been honored as a Small Business Influencer Champion three years in a row.

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