If you have decided to dissolve your LLC in Connecticut, you are not alone. Many LLC owners find themselves in this position every year. The good news is that the process is relatively simple, as long as you know what to do.
This article will show you how to dissolve an LLC in Connecticut and explain why going through the dissolution process with care and official paperwork is important. We will also highlight the differences between voluntary and involuntary dissolution.
Steps to Dissolving an LLC in Connecticut
A Connecticut limited liability company must follow the procedures outlined in the Connecticut Limited Liability Company Act to dissolve.
Each step is equally important because any mistake could have serious financial and legal consequences. Let's look at the steps necessary to dissolve an LLC in Connecticut.
Step 1: Notify LLC members and service providers
The first step is to notify all members of the LLC and its service providers. This includes any banks or other financial institutions that are holding the company's assets. You must provide the members with a copy of the dissolution notice, which is a document that states the LLC's intent to dissolve.
It is important to note that you are not required to notify creditors or debtors of the LLC's intention to dissolve.
However, it may be a good idea to send an advance notice in order to avoid any potential legal complications. Keep in mind that notification is not the same as seeking their consent. Consent is only required if it is explicitly stated in the LLC's operating agreement.
Step 2: Follow Your Operating Agreement
Connecticut LLC operating agreement will have provisions about the dissolution process. It is important to follow these provisions to the letter.
If your operating agreement does not contain any information about dissolution, then you will need to follow the procedures set forth in the Connecticut Limited Liability Company Act.
Sometimes, the LLC's operating agreement requires a dissolution meeting to be held. This is a meeting of the LLC's members where they have the dissolution vote on whether or not to dissolve a Connecticut LLC. Usually, the majority vote is enough, but many LLCs may require a unanimous vote too.
It is important to note that LLCs are not required to have an operating agreement. However, if you do have one, it is crucial that you follow it.
A Connecticut LLC operating agreement will also have provisions about distributing assets in case of dissolution. After LLC assets are used to pay off creditors, the remaining assets will be distributed among the LLC members in accordance with their ownership interests.
Step 3: Close All Business Accounts
Although this step isn't legally required during the formal process of dissolution, closing business accounts is an important practical measure to take. This includes business bank accounts, credit cards, and any other accounts associated with the LLC.
Once the LLC is officially dissolved, you'll no longer have access to these accounts and will be held personally liable for any debts or charges incurred.
To close a business bank account, you'll need to provide the bank with a letter signed by all of the LLC members stating that the account is being closed and providing the formal date on which it will be closed. The bank may also require a copy of the dissolution certificate.
To close credit card accounts, you'll need to contact each individual creditor and provide them with a proper written notice that the LLC will no longer transact business in the state.
Step 4: Close Various Tax Accounts
The Connecticut Department of Revenue Services doesn't require Connecticut LLCs to obtain tax clearance before the dissolution.
However, you should close your business entity tax account with the state to avoid any future complications.
To close your LLC's sales and use tax account (if you soled taxable goods), you'll need to call the Department of Revenue Services and request a final return be filed for your LLC.
Include the effective date of the dissolution and the reason for dissolution on the final return.
If you have any other state tax accounts, such as payroll or corporate income taxes, you'll need to file final returns for those as well.
To close your LLC's federal tax accounts, you'll need to file a final return with the IRS. Include the effective date of the dissolution and the reason for dissolution on the final return. You should also contact the IRS and let them know that your LLC has been dissolved and that you will no longer be filing returns.
Minimum business taxes must be paid before the dissolution of your LLC can be approved.
Step 5: File LLC Articles of Dissolution
The final step in dissolving your LLC is to file Articles of Dissolution with the Connecticut Secretary of State, Commercial Recording Division.
This form can be found on the Connecticut Secretary of State's website and must be submitted either by mail or in person. There is a filing fee of $120, which must be paid by check or money order.
The Certificate of Dissolution form should contain your business name, mailing address, registered agent information, and the effective date of dissolution. You will also need to sign and date the form.
Once the Articles of Dissolution are filed, your LLC will be officially dissolved, and all business activity must cease. You may want to consider publishing a notice in a local newspaper informing creditors and other interested parties of the dissolution.
Reasons to Dissolve an LLC in Connecticut
LLCs that conduct business in the state can suddenly decide to stop operating for various reasons. This is called voluntary dissolution, and it is done by filing a Certificate of Dissolution with the Connecticut Secretary of State, Commercial Recording Division.
However, a Connecticut LLC can also get dissolved involuntarily. Administrative dissolution calls for different steps, and it happens when the state decides to end your LLC's existence.
Voluntary Dissolution of a Connecticut LLC
The owners who decide to voluntarily dissolve their Connecticut LLC do so due to many reasons. Most commonly, it is because the company has become inactive, business debts have piled up, there are no more members or managers willing to continue operations, or the company's goals have been accomplished.
Involuntary Dissolution of a Connecticut LLC
A business entity that fails to pay common taxes, misses its annual reports, or the state can involuntarily dissolve filing fees. The process begins with a court decree, followed by the payment of applicable filing fees. The dissolution documents are then sent to the Secretary of State's office, which completes the process.
Involuntary dissolution can be a stressful and expensive process, so it's important to stay current on your LLC's taxes and filings. If you've received notification of an imminent dissolution, consider talking to an attorney or a professional service provider about your options.
How Long Does It Take To Dissolve a Connecticut LLC?
It usually takes around one week for the Connecticut Secretary of State to process your dissolution form.
However, if you file an expedited service request form, you can shorten the processing time by half. It will cost an additional $50, but it can help you speed up the process if you need to dissolve the LLC urgently.
Can I Dissolve a Foreign LLC in Connecticut?
Yes. Domestic LLCs must file the Articles of Dissolution while foreign entities file for the Certificate of Withdrawal with the Connecticut Commercial Recording Division.
After that, the process is the same as dissolving a domestic LLC, meaning you must pay all outstanding taxes and provide the SOS with the legal information about your dissolved LLC.
How Much Does It Cost to Dissolve an LLC in Connecticut?
The cost to file the Articles of Dissolution is $120. Filing the expedited service request form costs an additional $50 filing fee.
Expedited processing shortens the processing time by up to three business days. There might be some additional costs if you hire a professional to help you with the dissolution process.
Can I Re-Register a Connecticut LLC After Dissolution?
Yes. You can reinstate a business entity in Connecticut by following the same process as dissolving it but filing a reinstatement form with the Secretary of State instead. LLC must submit the Reinstatement Package, the annual report, late fees and pay a $120 filing fee.
Dissolving a Connecticut LLC: Conclusion
Dissolving an LLC can be a complex process, especially if you are not familiar with the legal procedures involved.
If you need assistance filing the necessary paperwork or have any other questions about dissolving your LLC, it is best to seek professional help. A qualified lawyer will be able to guide you through the process and ensure that all necessary paperwork is filed correctly.