Sometimes business owners must dissolve their Georgia-based LLCs. The reasons for this will always vary, but dissolving procedures are always the same.
From my experience, the best way to dissolve an LLC in Georgia is to follow all the official steps and ask for legal support.
This is something that I and my team of legal experts then advise as the best strategy. From our experience, everything is easier when you know the state’s laws and regulations in-depth.
Since we know how to set up, run and dissolve an LLC in Georgia we will below explain what steps to take to dissolve your LLC.
Quick Summary
- To dissolve an LLC in Georgia, you first need to unanimously approve the dissolution among all members
- File the Articles of Dissolution with the Georgia Secretary of State and pay the appropriate filing fee
- Always follow dissolution procedures per your Georgia LLC operating agreement, and make sure that you settle all debts, taxes, and obligations.
Steps to Dissolving a Georgia LLC
Georgia allows LLCs to dissolve after LLC members have completed the required procedures and submitted specified documents to the Georgia Secretary of State [1].
The operating agreement of your LLC is a must-have.
This document will detail the specific actions that must be completed to dissolve your limited liability company. State law will apply to dissolution if you don't have a Georgia LLC operating agreement.
The procedures for dissolving an LLC in Georgia are as follows.
1. Look through Your LLC Operating Agreement
Looking through your Georgia LLC operating agreement is the first step when it comes to dissolving your LLC. Every Georgia limited liability company should have an operating agreement.
This document will outline the rules and procedures for dissolving your LLC.
If you can't find your operating agreement, contact your Georgia LLC registered agent.
Although the state does not need Georgia LLCs to have an operating agreement to be registered, this situation demonstrates why it is vital to have one.
Typically, an LLC's operating agreement will demand that LLC members hold a meeting and begin the actual dissolution process before the LLC is formally dissolved.
The operating agreement will also specify how LLC assets will be distributed after the business debts are paid off. The remaining assets will then be distributed among the members.
2. Organize Voting
Organize voting among all the members to get the majority to approve a dissolution. All that is needed is a simple majority if all members agree to dissolve.
If any members disagree with the decision to liquidate, however, unanimous consent by all LLC members is required for the company to terminate.
There should also be a voting procedure and adequate provisions for dissolution outlined in your Georgia LLC operating agreement. If there is no adequate provision in the operating agreement that addresses this subject, the Georgia default legislation will apply.
To dissolve an LLC in Georgia, a unanimous vote of all LLC members is required under the state's default legislation.
3. Notify Suppliers and Creditors
Notify suppliers and creditors that your LLC will no longer transact business. This notification allows them to file a claim against the LLC in a timely fashion.
You should send a direct notice to any suppliers or other vendors who have been doing business with your Georgia LLC. A proper written notice should include the date by which all outstanding bills and payments must be made in this notification.
It's critical to note that notifying creditors does not relieve a company of LLC liabilities.
All creditors must still be paid by the company's dissolution plan or under Georgia law, regardless of whether they were notified [2].
4. Obtain Tax Clearance
Obtaining tax clearance is crucial before dissolving your Georgia LLC.
You must address all tax liabilities by following specific processes for each tax department.
Ensure outstanding taxes, fines, and obligations to the state government are paid in full, including sales tax, withholding tax, and privilege tax, to successfully dissolve your LLC.
After obtaining clearance from all tax accounts, proceed with the final step of dissolution.
If there are any outstanding taxes or fines owed to the state government, they must be paid before you can dissolve your LLC.
Sales tax, withholding tax, and privilege tax are just a few of the taxes that may be owed. Be sure to research all applicable taxes in your state and make sure they are paid in full before dissolving your LLC.
Once you have obtained clearance from various tax accounts, you can proceed with the last step in dissolving your LLC.
5. File your LLC Certificate of Termination
A Certificate of Termination is a document that officially dissolves your LLC. To file, you'll need to complete and submit the Articles of Dissolution form with the Georgia Secretary of State, Corporations Division.
The certificate of termination should contain your business name, mailing address, and the effective date of dissolution.
You can file the Certificate of Termination either online or by mail. Online filings are free of charge.
Make sure you include a note stating that the LLC is free of any actions pending against it in any court, whether in Georgia or other states, or that adequate arrangements have been made for the satisfaction of any pending liabilities.
Read our article for more information about the forms needed to dissolve an LLC.
Reasons to Dissolve a Georgia LLC
Reasons to dissolve a Georgia-based business will vary, as LLCs may be terminated for a variety of causes.
The most prevalent reasons are failure to remain in good standing with the state, i.e., submitting a Georgia LLC annual report, failing to pay taxes or annual report fees, failure to maintain a registered agent or bankruptcy.
If the owners fail to respond to official inquiries for information or take appropriate action when violations are discovered, this may lead to the administrative dissolution of a Georgia LLC.
How to dissolve an LLC in Georgia will largely depend on the reasons why the dissolution happened in the first place.
Voluntary Dissolution of a Georgia LLC
Voluntary dissolution of a Georgia LLC occurs when the owners decide to voluntarily dissolve a specific company. They do so because they believe it is in the company's best interests and its shareholders.
There are several reasons why an LLC might choose to dissolve, including:
- The company has outlived its purpose
- The members have irreconcilable differences
- The company is unable to pay its business debts as they come due
- The owners want to retire or move on to other interests.
Once the owners settle any known debts, send a written document directly to their creditors, close tax accounts, and file the termination form with the state's office, the LLC is dissolved.
Involuntary Dissolution of a Georgia LLC
The involuntary dissolution of a Georgia LLC occurs when LLCs fail to file annual reports with the state. Some other reasons might include engaging in illegal activities.
The most common reasons for the involuntary dissolution of an LLC are:
- Failing to file an annual registration
- Committing a felony or other serious crime
- Engaging in fraudulent activity
- Not paying taxes or fees
- Operating without a license or in violation of licensing requirements
- Violating state laws or regulations governing the LLC [3]
Suppose your LLC is involuntarily dissolved by the state. In that case, you may have to wind up the company and distribute its assets according to the company's Articles of Organization or Operating Agreement.
If you do not have a Georgia LLC Operating Agreement, the state will distribute the LLC assets according to default rules set by statute.
This process can be complicated and time-consuming, so it is important to seek legal advice from a law firm if your LLC is involuntarily dissolved.
FAQs
How to Dissolve a Foreign LLC in Georgia?
To dissolve a foreign LLC in Georgia, submit a Certificate of Cancellation (Certificate of Withdrawal) to the Secretary of State.
Include business details, formation date, dissolution reason, and member/manager list. No filing fee is required for this document.
Do I Have to Close Tax Accounts before LLC Dissolution in Georgia?
You don't need to close tax accounts before dissolving your LLC in Georgia.
However, ensure you file your final tax return and check the "final return" box on IRS Form 1065. Unsettled obligations should be addressed before closing accounts.
How Long Does It Take To Dissolve an LLC in Georgia?
Dissolving an LLC in Georgia might take up to seven business days. Expedited processing for $100 shortens dissolution to one business day if accounts are closed and there are no pending legal actions.
How Much Does It Cost to Dissolve an LLC in Georgia?
Dissolving an LLC in Georgia costs $10 for mail filings and is free for online filings. Expedited processing is $100. Additional costs may apply for notarization or third-party filing assistance.
Can I Reinstate a Dissolved LLC in Georgia?
You can reinstate a dissolved LLC in Georgia only if your LLC was dissolved administratively and no later than five years ago.
If your LLC was dissolved for any other reason, you could not reinstate it. You can apply for reinstatement through the Secretary of State website.
Can You Sue a Dissolved LLC in Georgia?
You can sue a dissolved LLC in Georgia but only in certain circumstances. If the owners failed to dissolve the company properly or were involved in illegal business operations when it was dissolved, then a lawsuit may be possible.
Does Georgia Require to Publish a Notice of LLC Dissolution?
Georgia does not require to publish a notice of LLC dissolution. Consider sending a notice when dissolving an LLC to avoid future issues with unknown claimants or creditors. Include vital information.
Dissolving an LLC in Georgia
If you still have doubts about how to dissolve an LLC in Georgia, it is important to seek professional help.
This process can be complex, and it is advisable to speak with an experienced law firm such as IncFile and a tax professional who can guide you through every step of the dissolution process.
Not only will they help you navigate the legal waters, but they can also offer advice on how to best protect your interests and minimize potential tax liability.
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