It is critical to officially dissolve your LLC if you no longer wish to work with it. If you don't act quickly, you may face tax liabilities and fines, as well as legal problems.
In this article, we will learn how to dissolve an LLC in Florida.
Florida LLC Dissolution
There are two basic ways to dissolve your LLC. They are as follows:
- If the company is free of LLC's debts or liabilities, you can file an Articles of Dissolution with the state agency responsible for filing annual reports for a Florida LLC and other records of corporations, which is usually the Secretary of State's Office. You will have to pay a fee to file this form.
- On the other hand, if your LLC has debts or liabilities, it must be evaluated whether you should file a Certificate of Dissolution to terminate your business. If the LLC owes any taxes, penalties are accrued by filing a Certificate of Dissolution.
70% tax is payable on outstanding loan balances that have not been repaid to creditors or members. You must file articles of dissolution if the remaining assets are distributed to LLC members.
If you want to end your business officially, you can set up an appointment with a certified public accountant who will guide you through all the necessary procedures involved in dissolving your corporation.
It is advisable for you to follow all instructions given by the accountant to avoid tax penalties or seek legal representation from a law firm.
Apply Your Florida LLC Operating Agreement
According to Florida law, any member of an LLC can dissolve the business by filing a Certificate of Cancellation, which was mentioned in the operating agreement. All members must agree and sign on this form as mentioned in the operating agreement and file it with the Secretary of State (SOS) office. Or you can send it through a mailing address via certified mail.
The certificate is then sent to all creditors and members of the LLC who are mentioned in the operating agreement. These individuals may object to its cancellation.
However, Florida's LLC Act allows written consent of all LLC members as a way of voluntary dissolution. In both cases, you must record all member's votes regarding the matter.
Winding Up Your LLC's Affairs
When your LLC is dissolved, it continues to exist only for the purpose of handling certain last matters that, together, are known as winding up the firm. You have the option of designating one or more LLC members or managers to manage the winding up.
The following are the key winding up activities for an LLC in Florida:
- collection of LLC assets
- disposing of LLC's remaining assets that are not distributed to members
- discharging the LLC's liabilities
- distributing LLC assets to creditors and to members
After canceling your business, you have to take additional steps that will ultimately lead to the dissolution of your LLC. You have to inform creditors and members that the business has been dissolved, and they should stop doing any transactions with it.
Close all bank accounts for your LLC and give a final accounting of all transactions involving them. You also have to file final tax returns with the IRS and your state's tax authority.
Your LLC will no longer exist once you do all these things. This implies that you won't be able to use it in the future for any business purposes, including filing taxes. If you want to avail of your services again, file a new business name or form a new LLC.
Setting up a business as an LLC is a big responsibility as you have to fulfill any legal obligations that may be difficult for you to comply with on your own. It is therefore advisable that you seek expert advice from attorneys and accountants before filing your LLC taxes, annual reports, dissolving it, or any other procedures involved in owning an LLC.
Close Your Business Tax Accounts
Florida LLCs have a number of tax accounts set up by various government agencies. Before you may dissolve your Florida LLC, you must first satisfy all taxes and/or penalties owing to these accounts.
Here are some of the common taxes your Florida LLC may owe:
- If you have or have had employees in Florida
- Florida re-employment Tax
- If your LLC has sold taxable items or services in Florida, it must register as a Florida vendor with the Department of Agriculture and Consumer Services.
- Sales & Use Tax
Notice to LLC's Creditors and Other Claimants
As soon as you have filed your Certificate of Cancellation, it's important that you notify all creditors and claimants that you conduct business with on your LLC of its cancellation. This is a crucial step in dissolving an LLC.
The IRS requires an LLC to dissolve the business before it can file for bankruptcy or put itself up for foreclosure or any other form of liquidation that may not be deemed as a legitimate dissolution.
It is therefore imperative that you inform creditors and claimants of your LLC's intention to dissolve or risk facing IRS sanctions for failing to follow procedures.
Florida LLC Articles of Dissolution
Florida LLCs must file Articles of Dissolution with the Department of State to officially dissolve the business. This document is proof that your business is now a dissolved LLC and that it has been legally and officially terminated.
What Does It Cost to Dissolve a Florida LLC?
The filing fee for Articles of Dissolution is $150.
How Long Does It Take to Close a Florida LLC?
It takes approximately six months to dissolve a Florida LLC. This timeframe includes the initial application and annual reporting periods that will follow your termination.
What Are Wind-Up Measures?
Wind-up measures are the procedures involved in closing a business. These activities are carried out before an LLC can be legally closed down by dissolving it.
After Dissolution, Is My Info Still Public?
No, since your LLC is no longer in operation. You are free to keep your business information private once you have dissolved it.
When Do I Need to Dissolve an LLC?
As soon as you no longer wish to operate a business as an LLC. You also have to dissolve it if the IRS has revoked its Employer Identification Number (EIN) or company registration with your Secretary of State.
How To Dissolve A Florida LLC: Conclusion
In conclusion, dissolving a Florida Limited Liability Company is not a simple procedure. Aside from the legal implications of ending your business, you need to earn enough money to compensate for its cancellation.
You may face financial difficulties in closing down an LLC, especially if it owes back taxes or penalties that can only be paid once the company is closed. However, you are required by Florida law to make good on your debts, even if it means taking out a loan.
Don't think that you can just stop paying your LLC taxes or that the business will simply die on its own. You should seek expert advice from accountants and attorneys before filing for LLC dissolution under Florida statutes.