How to Dissolve an LLC in Arizona? (Step by Step Guide)

According to the U.S. Small Business Administration, 22,123 Arizona establishments closed between March 2022 and March 2023, underscoring the necessity for LLC owners to understand the dissolution process thoroughly [1].

As a tax attorney who has guided over 25 Arizona LLC dissolutions in the past 5 years, I created this guide to walk you through each step—from the member vote to final account closures. You will learn exactly what forms to file, what fees to expect, and how to avoid common compliance mistakes.

Quick Summary

• To dissolve an LLC in Arizona, hold a dissolution meeting, consult the operating agreement, and notify third parties. 
• You must file the Articles of Termination with the ACC and pay a $35 filing fee.
• Arizona's first-year business failure rate stands at 25.7% and 50.4% after five years [2].
• I always remind my clients that LLC owners must close all business and tax accounts during dissolution.

Why You Should Voluntarily Dissolve Instead of Letting Your LLC Lapse

If you stop operating your Arizona LLC without formally dissolving it, the Arizona Corporation Commission may administratively dissolve your company for noncompliance [3].

This creates three serious risks, because you:

1. Lose your personal liability protection
2. Forfeit your company name to public use after six months
3. Retain responsibility for any unpaid taxes and penalties.

Worse, the ACC does not investigate reinstatement filings, so someone could reinstate your dormant LLC without your knowledge. Voluntarily dissolving your LLC costs $35 and gives you full control over the process.

6 Steps to Dissolving an LLC in Arizona

Before the Arizona Corporation Commission approves dissolution, LLC owners must take the following six steps to complete the official paperwork and dissolve the company.

Step 1: Vote to Dissolve the LLC

LLC members must vote to dissolve the Arizona limited liability company. The dissolution vote must be unanimous unless your LLC operating agreement provides otherwise. You'll need a majority vote if that's what it requires.

To hold our dissolution meeting, we gave each member written notice of the meeting date, time, and location at least ten days in advance. At the meeting, we discussed the dissolution and vote.

"Arizona requires a vote or agreement from LLC members to initiate dissolution, aligning with state statutes."

- Jon Morgan, CEO, Co-Founder and Editor-in-Chief of Venture Smarter

Step 2: Notify Creditors About Your LLC's Dissolution

LLC owners must let their creditors and lenders know about the planned dissolution before they officially dissolve the business entity.

In our case, we dissolved our LLC and distributed the remaining assets among LLC members only after paying off all business debts and obligations.

Step 3: File Final Tax Returns and Obtain Tax Clearance

Arizona LLC must pay all outstanding taxes before the dissolution.

Although tax clearance is not necessary (only corporations and foreign LLCs need the Tax Clearance Certificate), it is recommended to close various tax accounts belonging to your LLC.

Some of the taxes our LLC had to close include sales tax and withholding tax accounts.

Step 4: File Articles of Termination

You file LLC Articles of Termination with the Arizona Corporation Commission [4]. The LLC Articles of Dissolution is the form needed to dissolve an LLC and is available on the Arizona Corporation Commission website.

When filing our LLC Articles of Dissolution we included the name of the Arizona limited liability company, the formal date of filing, the effective date of dissolution, and the signatures of all LLC members.

Arizona Corporation Commission charges a $35 filing fee for the Articles of Dissolution. The money is payable to the Corporate Filings Section, 1300 W. Washington St.

Step 5: Distribute Assets

Distributing assets after the dissolution of an LLC in Arizona involves a specific process that must be followed to ensure compliance with state laws and the terms of the LLC's operating agreement.

Before distributing assets, the LLC must pay off all its debts and fulfill its obligations. You should then convert the LLC's assets into cash unless the operating agreement specifies a different method of distribution.

In our case, we consulted the LLC's operating agreement as it had specific instructions on how to distribute assets upon dissolution.

Note that if the agreement does not specify, default Arizona state law applies.

Step 6: Close All Accounts and Cancel Licenses and Permits

Before you dissolve an Arizona limited liability company, you need to make sure that all business accounts are closed.

This includes any business bank accounts, credit lines, or loans that are in the LLC's name. You will also need to cancel any business licenses or permits the state issued to your LLC.

During our dissolution, we also notified the Department of Revenue that we were dissolving our LLC.

You can also do this by sending a written notice to the department. Be sure to include the business name, date of dissolution, and legal information.

Related Articles:

• Arizona LLC Name Reservation
• How to Set Up an LLC in Arizona
• Premium Arizona Registered Agent Services
• Top Arizona LLC Formation Services

FAQs

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References:

1. https://advocacy.sba.gov/wp-content/uploads/2024/11/Arizona.pdf
2. https://www.bls.gov/bdm/bdmage.htm
3. https://www.azleg.gov/ars/29/03708.htm
4. https://azcc.gov/docs/default-source/corps-files/instructions/l031i-instructions-articles-of-termination.pdf