How to Dissolve an LLC in Georgia? (A Complete Guide)
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 as an LLC consultant, the best way to dissolve an LLC in Georgia is to follow all the official steps and ask for legal support.
Since I know how to set up, run, and dissolve an LLC in Georgia I will explain below 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.
- Always follow dissolution procedures per your Georgia LLC operating agreement, and make sure that you settle all debts, taxes, and obligations.
- Given that Lending Tree reports a first-year business failure rate in Georgia of 25.1%, significantly higher than the national average of 20.8%, understanding the dissolution process is crucial for local entrepreneurs who might face early challenges.
- Personally, I view the dissolution process as an essential learning curve that equips business owners with the resilience and knowledge needed for future success.
6 Steps to Dissolving an LLC in Georgia
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 procedures for dissolving an LLC in Georgia are as follows.
Step 1: Vote To Dissolve the LLC
Organize voting among all the members to get the majority to approve a dissolution.
In our case, all that was needed was a simple majority as all members agreed 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.
Step 2: Notify Creditors About Your LLC's Dissolution
Notify suppliers and creditors that your LLC will no longer transact business. This step gains added importance considering the substantial number of closures, with the US Small Business Administration reporting that 30,015 Georgia establishments closed between March 2021 and March 2022 [2].
During our dissolution, we sent direct notices to any suppliers or other vendors who had been doing business with our 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 [3].
Step 3: File Final Tax Returns and 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.
In our case, we also cleared any sales tax, withholding tax, and privilege tax, to successfully dissolve our 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.
Step 4: File Articles or Certificate of Dissolution
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."
-Jon Morgan, Co-Editor & Co-Founder of Venture Smarter
You can file the Certificate of Termination either online or by mail. In our case, we preferred filing on the SOS website as 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.
Step 5: Distribute Assets
Once all debts and obligations are settled, the remaining assets of the LLC are distributed among the members.
This distribution should align with the provisions of the operating agreement or, if not specified, according to Georgia state law.
In our dissolution, we reviewed our operating agreement to guide the equitable distribution of the LLC's remaining assets, adhering to both the agreement and state law requirements.
6. Close All Accounts and Cancel Licenses and Permits
The last step in dissolving an LLC in Georgia involves closing all business-related accounts and canceling any licenses or permits the LLC holds.
This is a critical step to avoid future liabilities and formally conclude all business activities.
You must systematically close each business account and cancel all your licenses and permits, ensuring a thorough and compliant conclusion to your business operations in Georgia.
FAQs
Do I Have to Close Tax Accounts before LLC Dissolution in Georgia?
No, 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?
Yes, 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.
References:
- https://ecorp.sos.ga.gov/BusinessSearch
- https://advocacy.sba.gov/wp-content/uploads/2023/11/2023-Small-Business-Economic-Profile-GA.pdf
- https://law.justia.com/codes/georgia/2020/title-18/chapter-2/article-3/section-18-2-40/
