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

Delina Chantel Yasmeh
Published by Delina Chantel Yasmeh | Author
Last updated: June 20, 2024
FACT CHECKED by Lou Viveros, Growth & Transition Advisor
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Limited liability company owners choose to voluntarily dissolve their Arkansas LLC because the business has already accomplished its goals, a project has been concluded and the business is no longer profitable.

Regardless of the reason, it is essential to follow the legal process for dissolution.

As a business consultant specializing in limited liability companies, I have over a decade of experience addressing clients’ concerns.

After comprehensive research and collaboration with our team of attorneys, I’ll offer you a detailed guide on dissolving your Arkansas LLC, backed with all the legal information you need.

Quick Summary

  • To dissolve an Arkansas limited liability company, members should consult the operating agreement and file the required documents with the Arkansas Secretary of State Business and Commercial Services.
  • Close all your business tax accounts by filing a final franchise tax report and obtaining clearance.
  • The outlined steps for dissolution gain significant importance considering Lending Tree's data, indicating that 22.5% of Arkansas businesses fail within their first year. This underscores the critical need for LLC owners to be well-prepared.
  • I advise notifying all interested parties to settle business operations and outstanding obligations.


6 Steps to Dissolving an LLC in Arkansas

A woman studying about the dissolution process of an LLC in Arkansas

To dissolve an LLC in Arkansas, ensure the business is eligible and meets the following criteria:

  • All business debts and liabilities of the Arkansas LLC must be paid off or otherwise settled.
  • The Arkansas LLC must not be involved in any pending legal proceedings.

If you think your Arkansas LLC is eligible for dissolution, here's what you should do next:

1. Vote to Dissolve the LLC

Before calling a vote, review your Arkansas LLC operating agreement. It should outline the procedure for dissolution, including how a vote to dissolve should be conducted and the required majority for such a decision.

Schedule a formal meeting of all LLC members. Provide adequate notice to all members as required by your operating agreement or state law.

The main item on the agenda should be the vote to dissolve the LLC. You may also include discussions on the reasons for dissolution, the process following the dissolution, and any other relevant business.

During our meeting, we discussed the reasons for considering dissolution and any alternatives and ensured that all members had an opportunity to express their views.

2. Notify Creditors About Your LLC's Dissolution

In light of the 7,558 Arkansas establishments that closed from March 2021 to March 2022, as per the US Small Business Administration, the process of dissolving an LLC in Arkansas, including notifying all interested parties, including the clients, creditors, and banks by sending a notice of dissolution by mail, becomes even more pertinent.

Be sure to include the date of the dissolution and the fact that the business is no longer operating.

During our dissolution, we settled all remaining services with clients and paid off outstanding debts to creditors. Afterward, we distributed the remaining assets equitably to the members, as per the Arkansas LLC operating agreement [1].

3. File Final Tax Returns and Obtain Tax Clearance

Another important step in dissolving your Arkansas limited liability company is to close all tax accounts associated with the business.

To close your tax accounts, you will need to file a final franchise tax report and obtain tax clearance from the Arkansas Department of Revenue.

Once you have these documents, you can close your LLC's business bank account and tax accounts and cancel any business licenses or permits that you may have.

"Consult with a tax advisor to address any final tax responsibilities for your Arkansas LLC."

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

4. File Articles or Certificate of Dissolution

An office worker discussing in front of two other office workers about LLC dissolution in Alaska

The next step in dissolving your LLC is to file the Articles of Dissolution with the Arkansas Secretary of State Business and Commercial Services. This can be done online, by mail, or in person.

We chose online filing as it's often the most convenient and fastest method.

You will need to provide the following information:

  • The name of your LLC
  • The date of dissolution
  • The signature of an authorized representative of the LLC

We also included a statement that the decision to dissolve was made per the LLC's operating agreement and the vote of the members.

Once you have filed the Articles of Dissolution, your LLC will be officially dissolved.

5. Distribute Assets

When completing this step during our dissolution, we compiled a detailed list of all assets owned by our LLC in Arkansas.

This encompassed tangible assets such as real estate, machinery, and inventory, as well as intangible assets like intellectual property rights and accounts receivable.

It's crucial to assign an accurate value to each asset. For assets like property or specialized machinery, consider hiring a professional appraiser to determine their market value.

Before the allocation of assets, it's important to settle any outstanding debts and financial commitments of the LLC. This includes clearing any loans, making payments to creditors, and addressing tax obligations.

In Arkansas, the distribution of assets typically occurs in proportion to the ownership stakes of the LLC members, unless the LLC's operating agreement outlines a different distribution strategy.

6. Close All Accounts and Cancel Licenses and Permits

Shut down all company bank accounts, credit facilities, and other financial instruments in Arkansas. In our case, we confirmed that all transactions were finalized and that the accounts had a zero balance before their closure.

Discontinue any ongoing service contracts or subscriptions in Arkansas. Reach out to the appropriate Arkansas state and local authorities to revoke any business licenses or permits your LLC holds.

If your LLC had employees in Arkansas, make sure to issue all final paychecks, settle any benefits, and provide necessary employment documents, such as W-2 forms.

Keep thorough records of all account closures, license revocations, and other relevant actions for future reference and to ensure compliance with legal requirements in Arkansas.

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FAQs

How Much Does It Cost to Dissolve an LLC in Arkansas?

It costs $50 to dissolve an LLC in Arkansas. This fee is paid to the state when you file your Articles of Dissolution.

What Happens to the Business Assets of an Arkansas LLC When It Is Dissolved?

When an Arkansas LLC is dissolved, its business assets are distributed to the members according to their membership agreement. If there is no membership agreement, the assets are distributed in proportion to the members' ownership interests. Debts of the LLC are paid first, and then the remaining assets are distributed.

How Long Does It Take to Dissolve an LLC in Arkansas?

It takes 2 business days to dissolve an LLC in Arkansas if you submit your documents by mail. Walk-in submissions are processed while you wait.


References:

  1. https://www.sba.gov/blog/basic-information-about-operating-agreements

About The Author

Author
Delina Chantel Yasmeh, J.D./Tax LL.M, specializes in Mergers and Acquisitions at Deloitte and PwC, managing billion-dollar transactions. Educated in Accountancy at California State University and holding advanced degrees from Loyola Law School, she is highly skilled in tax law. Delina also dedicates time to pro bono work for women and children.
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Growth & Transition Advisor
LJ Viveros has 40 years of experience in founding and scaling businesses, including a significant sale to Logitech. He has led Market Solutions LLC since 1999, focusing on strategic transitions for global brands. A graduate of Saint Mary’s College in Communications, LJ is also a distinguished Matsushita Executive alumnus.
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