Dissolution is the legal process of ending a business. Once an LLC is dissolved, it no longer exists and can no longer conduct business. If you're considering dissolving your Hawaii limited liability company, you need to know how to do it properly.
In this article, we'll discuss the process for dissolving a Hawaii LLC and what forms you'll need to file.
But let us first discuss the two ways to dissolve an LLC.
Two Ways to Dissolve Your Hawaii LLC
There are two ways to dissolve your LLC:
- Voluntary Dissolution: You can file a Certificate of Dissolution with the commerce and consumer affairs division and pay the required filing fee. This is typically used when all members agree to dissolve the LLC.
- Involuntary Dissolution: You can file a Petition for Involuntary Dissolution with the commerce division. This is used when one or more members want to dissolve the LLC, but not all members agree.
Hawaii LLC Operating Agreement
Before taking any action in dissolving your limited liability company, you may want to see your LLC's operating agreement to confirm no language would prohibit the Hawaii LLC from being dissolved.
Hawaii LLC operating agreement is a contract between the LLC members (owner) that governs how the LLC will be run.
Your LLC's operating agreement should include provisions for dissolution, which would outline the process and steps to be taken for the Hawaii LLC to be dissolved.
The agreement may also include a clause that would allow the members to vote on dissolving the LLC.
If you cannot find your LLC's operating agreement, or if it does not have any provisions for dissolution, you can dissolve your Hawaii LLC by following the procedure for dissolution.
Close Your Business Tax Accounts
When you dissolve your limited liability company, you must close your business tax accounts with the Hawaii Department of Taxation. You will need to file a final tax return and pay any outstanding tax liabilities.
You will also need to obtain a tax clearance certificate from the Hawaii Department of Taxation. This document states that all tax liabilities have been paid and that the business is in good standing.
Once you have obtained the tax clearance certificate, you can file it with the Certificate of Dissolution.
File the Certificate of Dissolution
The first step in dissolving your LLC is to file a Certificate of Dissolution (if dissolving voluntarily) or the Petition for Involuntary Dissolution (if dissolving involuntarily) with the business registration division of the Hawaii Department of Consumer Affairs.
The certificate must be signed by all of the LLC's members and must include the following information:
- The business name of the LLC
- The date of dissolution
- The reason for the dissolution
- The signature of all LLC members
You can find the form for the Certificate of Dissolution on the business registration division's website.
Once you have completed and signed the form, you will need to submit it to the business registration division along with a $25 filing fee.
The Hawaii business registration division will then review your application and, if approved, will dissolve your LLC.
Articles of Termination
Once your LLC has been dissolved, you will need to file Articles of Termination with the Department of commerce and consumer affairs division. This document will officially dissolve your LLC and remove it from the state records.
You can find the form for this online, and it must be signed by all members of the LLC.
After the Hawaii LLC Articles of Termination have been filed, you will need to notify all creditors of the dissolution of your LLC. This can be done through a formal newspaper or other publication notice. You will also need to cancel any Hawaii business licenses and permits associated with your LLC.
Once all of these steps have been completed, your LLC will be officially dissolved, and you will no longer be responsible for minimum business taxes in Hawaii.
Maintaining Your Business Records
Maintaining accurate and organized business records is essential during dissolving an LLC in Hawaii. We strongly suggest you retain documents such as the Hawaii business's operating document, Articles of Dissolution, and any relevant financial records.
These records may be required by the Hawaii Department of Commerce and Consumer Affairs or other entities for reference, audits, or resolving potential disputes.
Properly managing and retaining these records can help ensure compliance, facilitate the completion of the business dissolution form, and effectively address any outstanding financial obligations.
FAQs
How Do I Cancel My Hawaii Business License?
You can cancel your Hawaii business license by submitting a written request to the Department of Commerce.
Your request must include your name, business name, and the effective date of the cancellation. You can find more information on how to cancel your license on the Department's website.
Why Does a Company Dissolve?
There are lots of reasons why a company might dissolve, but most often, it has to do with financial matters or disagreements among the owners.
Dissolving a Hawaii LLC: Conclusion
Dissolving your LLC in Hawaii doesn't have to be a complicated process. By following the consumer affairs division's procedure and taking care of a few loose ends, you can easily dissolve your LLC.
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