How to Dissolve an LLC in Arizona? (Step by Step Guide)
According to US Small Business Administration, 15,665 Arizona establishments shut down between March 2021 and March 2022, underscoring the necessity for LLC owners to understand the dissolution process thoroughly.
The dissolution process can be complicated, but it is important to understand the common dissolution steps.
With years of experience as a business consultant and a track record of helping numerous clients with LLC matters, I researched thoroughly to provide a comprehensive guide on the dissolving process.
This article will provide a detailed explanation of each step involved in the Arizona LLC dissolution.
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 Dissolution with the SOS and pay a $35 filing fee.
- Arizona's first-year business failure rate stands at 22.8% and 50.8% after five years.
- I always remind my clients that LLC owners must close all business and tax accounts during dissolution.
6 Steps to Dissolving an LLC in Arizona
Before the Secretary of State approves dissolution, the Arizona LLC owners must take several 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, it was only after all business debts, and obligations had been paid off that our LLC could be dissolved and the remaining LLC assets distributed among LLC members.
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 has to close include Sales tax and Withholding taxes.
Step 4: File Articles or Certificate of Dissolution
LLC Articles of Dissolution (Articles of Termination) are filed with the Arizona Corporation Commission [1]. The LLC Articles of Dissolution is a form needed to dissolve an LLC and are 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 that have been issued to the 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
How Much Does It Cost to Dissolve an LLC in Arizona?
It costs $35 to dissolve an LLC in Arizona. Expedited processing is charged an additional $35, and this service shortens the processing period to just a few business days.
How Long Does It Take To Dissolve an LLC in Arizona?
It takes around 15 to 20 business days to dissolve an LLC in Arizona. You can expedite the process to 2 to 3 days for an additional filing fee. Your application will be processed once you have submitted the necessary paperwork, including the Articles of Dissolution, to the Arizona Corporation Commission.
Can I Reinstate a Dissolved LLC in Arizona?
You can reinstate a dissolved LLC in Arizona. The process is pretty simple. You'll need to file a Certificate of Reinstatement with the Arizona Corporation Commission and pay a $100 fee.
How Do I Get a Tax Clearance Certificate in Arizona?
You can get a tax clearance certificate in Arizona during dissolution by paying a required fee of $25. The Arizona Department of Revenue handles tax clearance certificates.
References:
- https://azcc.gov/docs/default-source/corps-files/instructions/l031i-instructions-articles-of-termination.pdf
