Business owners may decide to voluntarily dissolve a Colorado limited liability company due to the completion of the business, termination of a project, or the LLC is no longer profitable.
There are specific steps that need to be complied with for your Colorado business to be legally terminated.
As a business consultant for limited liability companies, I gained over a decade of practice helping clients with formation, organization, and maintenance.
I’ll provide you with a complete guide on how to voluntarily dissolve a Colorado limited liability company, backed by extensive research and legal advice from our panel of attorneys.
Quick Summary
- To dissolve an LLC in Colorado, follow the provisions contained in the operating agreement and submit all required documents to the Colorado Secretary of State office.
- Pay all business debts before distributing the remaining assets to the members.
- For the state to finally approve the dissolution, settle all tax obligations.
Steps to Dissolving a Colorado Limited Liability Company
The following is a guide on how to dissolve an LLC in Colorado.
1. Notify All Colorado LLC Members of the Dissolution
Limited liability company members must be notified of the dissolution by mailing a proper written notice to each member or posting the advance notice in an appropriate location.
The dissolution vote must be unanimous, so it is important to ensure that all LLC members are on board with the decision.
In some instances, the Colorado LLC operating agreement may stipulate different voting procedures, so unanimous consent might not be necessary.
2. Consult the Operating Agreement
The Colorado LLC operating agreement outlines the dissolution process – voting requirements and liquidation of assets. You should follow the provisions indicated in the document.
In the absence of an operating agreement, Colorado law applies.
3. Notify LLC Creditors and Lenders
Colorado LLC's dissolution process must include notifying LLC creditors, unknown claimants, and lenders of the company's impending closure.
You must settle all LLC obligations and business debts before distributing the remaining assets equitably to the members.
4. Distribute LLC Assets According to the Operating Agreement
The Colorado LLC operating agreement should dictate the order in which members are paid out.
State law will dictate the payout order if there is no Colorado LLC operating agreement.
Generally, the assets of a dissolved LLC are distributed to members according to their ownership percentage.
5. Cancel All Business Licenses and Permits
To properly dissolve an LLC in Colorado, you need to cancel licenses and permits with the appropriate agencies to formalize the dissolution process.
This can be done through the Colorado Secretary of State [1]. Depending on the license, you may have to notify the state or local municipality where your business entity is located.
Licenses and permits that may have to be canceled include the following:
- Professional licenses
- Trade licenses
- Fictitious business name registrations
- Local tax permits and licenses
Each license or permit will have specific instructions on how to cancel it. Be sure to follow all the steps to avoid any penalties or fines, especially for your business name.
6. Settle LLC Tax Obligations
Various tax accounts must be settled before the Colorado Secretary of State processes your Articles of Dissolution. This includes business income taxes, sales and use tax and withholding tax.
If you have outstanding taxes on your tax accounts, the state will not dissolve your Colorado LLC until you pay them.
Additionally, the state may impose legal consequences and incur penalties and interest charges.
According to Colorado law, you are also responsible for filing a final return for your Colorado LLC.
7. File LLC Articles of Dissolution
A Colorado business can't terminate its legal existence unless it will file Articles of Dissolution (called the Dissolution Statement in Colorado).
The LLC's dissolution form must contain the following:
- Business name
- LLC's principal office address (mailing address)
- Registration number
- The formal date of the dissolution
- All LLC members' signatures
There is a $25 filing fee for Articles of Dissolution. Be careful when filling out the information, such as the business name, to avoid paying the filing fee again.
FAQs
How Much Does It Cost to Dissolve a Colorado LLC?
It costs around $10 to $25 to dissolve a Colorado LLC, which covers filing the Articles of Organization with the Colorado Secretary of State in person or by mail.
Keep in mind that the cost can vary depending on the minimum business taxes you owe.
How Long Does It Take To Dissolve an LLC in Colorado?
It takes four weeks to dissolve an LLC in Colorado, while online filing is usually processed within 24 hours. Make sure to choose an expedited service if you are in a rush.
Can I Dissolve a Foreign LLC in Colorado?
You can dissolve a foreign LLC in Colorado by submitting the Statement of Foreign Entity Withdrawal and including the legal information, the effective date of withdrawal, and the original Certificate of Good Standing from the state in which your LLC was formed.
Do Colorado LLCs Need Tax Clearance Before the LLC's Dissolution?
Colorado LLCs do not need tax clearance before the LLC’s dissolution. However, you should settle common taxes and close all tax accounts before the state approves the dissolution.
Can You Reinstate a Dissolved LLC in Colorado?
You can reinstate a dissolved LLC in Colorado within one year of the voluntary dissolution date. To do so, you'll need to file a Certificate of Reinstatement with the Colorado Secretary of State's office.
How to Close a Colorado LLC
To close an LLC in Colorado, you need to follow the operating agreement and comply with statutory requirements. It is best to seek help from a professional to streamline the procedure.
A professional service provider like IncFile can guide you through the process and ensure that all the necessary steps are taken to properly dissolve your Colorado LLC.
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