How to Dissolve an LLC in Connecticut? (Step By Step Guide)
If you have decided to dissolve your LLC in Connecticut, the process is relatively simple as long as you comply with statutory requirements.
As a business consultant for limited liability companies, I gained over a decade of experience helping clients and addressing their concerns regarding LLC formation.
That said, I’ll inform you about all the ways you could dissolve a Connecticut LLC. The article is backed with in-depth research and legal advice from our team of attorneys.
- To dissolve an LLC in Connecticut, consult your operating agreement and follow state requirements.
- After debts are paid, any remaining assets are distributed among the LLC members.
- The steps for dissolution become particularly crucial in light of data from Lending Tree, which shows that 23.1% of businesses in Connecticut fail within their first year. This emphasizes the essential need for LLC owners to be thoroughly prepared.
- You may need to obtain tax clearance from the Connecticut Department of Revenue Services to ensure all tax liabilities are settled.
6 Steps to Dissolving an LLC in Connecticut
The steps to dissolving an LLC in Connecticut should be followed in order for your business to be legally terminated.
You must follow the procedures outlined in the operating agreement or in the Connecticut Limited Liability Company Act.
Given that 11,092 Connecticut establishments shut down between March 2021 and March 2022, as reported by the US Small Business Administration, it is crucial for LLC owners to understand the dissolution process thoroughly.
Here are the steps to dissolve an LLC in Connecticut:
1. Vote to Dissolve the LLC
Connecticut LLC's operating agreement outlines the provisions about the voting procedures during the dissolution process. It is important to follow these provisions to the letter.
If your operating agreement does not contain information about dissolution and voting, then you will need to follow the Connecticut Limited Liability Company Act.
Our Connecticut LLC operating agreement required a dissolution meeting where all members decided and voted on closing the business.
2. Notify Creditors About Your LLC's Dissolution
After identifying all your creditors and suppliers, you must inform them of the dissolution by sending a written notice. The notice should be formal and clear.
It needs to include the name of your LLC, a statement of dissolution, and a request for them to present their claims. Specify a deadline by which claims must be submitted, which should be under Connecticut state law.
Determine the best method to notify each creditor. Always follow the most formal method required by your agreement with each creditor.
During our dissolution, we kept detailed records of all communications with creditors. This included copies of the notices sent, the method of sending, dates, and any responses received.
"It's essential to communicate effectively with creditors during the dissolution process, providing formal notice and a clear deadline for claims."
- Jon Morgan, CEO, Co-Founder and Editor-in-Chief of Venture Smarter
3. File Final Tax Returns and Obtain Tax Clearance
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 for the dissolution to be approved.
During our experience, we had to call the Department of Revenue Services and file a final return to close our LLC's sales and use tax account because our entity sold taxable goods.
Include the effective date of the dissolution and the reason for dissolution on the final return.
4. File Articles or Certificate of Dissolution
This form can be found on the Connecticut Secretary of State's website and must be submitted either by mail or in person.
The Certificate of Dissolution form should contain your business name, mailing address, Connecticut registered agent information, and the effective date of dissolution. You will also need to sign and date the form.
During our filing, we paid for expedited services and our documents were approved in three business days. Once our Articles of Dissolution were filed, our LLC was officially dissolved, and all business activity ceased.
5. Distribute Assets
A Connecticut LLC operating agreement will also have provisions about distributing assets in case of dissolution.
After LLC assets were used to pay off creditors, the remaining assets were distributed among our Connecticut LLC members following their ownership interests.
6. Close All Accounts and Cancel Licenses and Permits
Close all business accounts including LLC bank accounts, credit cards, and other records associated with the LLC.
To close a business bank account, you'll need to provide the bank with a letter signed by all LLC members and provide the formal date on which it will be closed. The bank may also require a copy of the dissolution certificate.
In our dissolution, we also canceled all the local and professional licenses and permits our Connecticut business held.
How Long Does It Take To Dissolve a Connecticut LLC?
It takes around one week to dissolve a Connecticut LLC. However, if you file an expedited service request form, you can shorten the processing time by half.
Can I Dissolve a Foreign LLC in Connecticut?
You can dissolve a foreign LLC in Connecticut by filing the Certificate of Withdrawal with the Connecticut Commercial Recording Division.
How Much Does It Cost to Dissolve an LLC in Connecticut?
It costs $0 to dissolve an LLC in Connecticut. However, higher fees apply if you hire a professional service provider. You can avail for expedited processing for an additional $50.
Can I Re-Register a Connecticut LLC After Dissolution?
You can re-register a Connecticut LLC after dissolution by submitting a completed Reinstatement Package and an annual report, paying a filing fee of $120 and paying penalties owed.