If you're a business owner in Georgia, there may come a time when you no longer want to conduct business and need to dissolve your LLC. This process can be tricky, but with the help of this guide, you'll be able to do it without any trouble.
This article will explain the steps involved in dissolving an LLC in Georgia. We'll also highlight some of the reasons why business owners choose to dissolve their LLCs. Whether you're doing it voluntarily or involuntarily, make sure you follow these steps to ensure a smooth dissolution process.
Steps to Dissolving a Georgia LLC
Georgia allows LLCs to dissolve after LLC members have completed the required procedures and submitted specified documents with the Georgia Secretary of State.
The operating agreement of your LLC is a must-have.
This document will detail the specific actions that must be completed in order to dissolve your limited liability company. State law will apply to dissolution if you don't have an operating agreement.
The procedures for dissolving an LLC in Georgia are as follows.
Step 1: Look through Your LLC Operating Agreement
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 company's 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.
Step 2: Organize Voting
In most situations, the majority of LLC members must 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.
Step 3: Notify Suppliers and Creditors
The winding-up process officially begins by notifying 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 in accordance with the company's dissolution plan or pursuant to Georgia law, regardless of whether they were notified.
Step 4: Obtain Tax Clearance
Tax liabilities that are not addressed prior to dissolving your LLC can create serious problems for you and your business.
In order to dissolve your Georgia LLC, you must obtain tax clearance from the various tax departments with which your LLC has interacted.
Each department will have its own specific process for obtaining tax clearance, so you must research how to do this for each department.
Generally, you will need to provide documentation that shows the tax liabilities have been paid in full.
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 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.
There is a $10 filing fee associated with this process. You can pay by check or money order made that is payable to 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 More: What Forms Are Needed to Dissolve an LLC?
Reasons to Dissolve a Georgia LLC
An LLC's operations in Georgia 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 an annual report with the state, 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
When the owners decide to voluntarily dissolve a Georgia LLC, they do so because they believe it is in the company's best interests and its shareholders.
There are a number of 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 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.
It is always recommended that you hire a law firm or a business attorney to help you through the process, especially if you have to file separate forms with a different Georgia department. Mistakes in the process can be costly, and it's always better to be safe than sorry.
Involuntary Dissolution of an Illinois LLC
When LLCs fail to file annual reports with the state, engage in illegal activities, or otherwise fail to remain in good standing with the state, the state terminates the company involuntarily.
The most common reasons for 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
- Pperating without a license or in violation of licensing requirements
- Violating state laws or regulations governing the LLC
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 an Operating Agreement, the state will distribute the 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.
How to Dissolve a Foreign LLC in Georgia?
Foreign LLCs in Georgia have to go through a specific process in order to dissolve.
Unlike domestic LLCs that file the Certificate of Termination, the first step for a foreign LLC is to submit a Certificate of Cancellation (Certificate of Withdrawal) with the Secretary of State.
This document must include the business name, the date the LLC was formed, the reason for the dissolution, and the list of all members/managers. There is no filing fee associated with this document.
Do I Have to Close Tax Accounts before LLC Dissolution in Georgia?
According to state law, you don't need to get tax clearance in Georgia before dissolving your LLC.
Your final tax return will be the return that you file before the termination. The only thing you have to pay attention to is checking the "final return" box on your IRS Form 1065.
However, keep in mind that you cant close any account that has unsettled obligations connected with it.
How Long Does It Take To Dissolve an LLC in Georgia?
The processing time for a Georgia LLC Certificate of Termination is up to seven business days. You can always opt for expedited processing that is available for an additional fee of $100.
This will shorten the processing time to one business day. Provided that you have closed business accounts and there is no pending action against your company, the dissolution will be effective immediately.
How Much Does It Cost to Dissolve an LLC in Georgia?
Online filings are free of charge. If you choose to file by mail, the filing fee is $10.
Expedited processing is $100. The Secretary of State's office will process your dissolution request and send you a stamped, certified copy of the Certificate of Termination.
This document confirms that the LLC has been dissolved by the state. Additional costs might apply if you need to have the document notarized or you decide to hire a third party to file the documents for you.
Can I Reinstate a Dissolved LLC in Georgia?
Yes, but 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 file an application for reinstatement through the Secretary of State website.
Can You Sue a Dissolved LLC in Georgia?
Yes, but only in certain circumstances. If the owners failed to dissolve the company properly or were involved in illegal activity when it was dissolved, then a lawsuit may be possible.
However, most lawsuits against dissolved LLCs are unsuccessful. Other entities that the dissolved LLC harmed may have a better chance of success.
Does Georgia Require to Publish a Notice of LLC Dissolution?
No, Georgia does not require to publish a notice of LLC dissolution.
However, it could be in your best interest to do this, especially because there might be unknown claimants or creditors who might interest the LLC and cause you problems down the road, even after the dissolution is completed.
Make sure you include your business name and other important information in the notice.
Dissolving an LLC in Georgia: Conclusion
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 and 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.