How to Dissolve an LLC in Kentucky? (Process & Steps Guide)
There are several reasons why business owners decide to voluntarily dissolve their Kentucky LLC. It may be due to business completion, termination of a project, members’ personal decisions or the entity is no longer viable.
Whichever the reason, there is a legal process to be followed.
With over a decade of practice as a business consultant specializing in limited liability companies, I’ll provide you with a comprehensive guide on closing a Kentucky LLC, including pertinent steps you need to do after dissolving your company.
- To dissolve an LLC in Kentucky, follow the provisions outlined in the operating agreement and submit all required documents.
- Before dissolving your business entity, notify all interested parties and pay the remaining tax obligations.
- Given that 21.6% of businesses in Kentucky fail in the first year according to Lending Tree, understanding the dissolution process is crucial for LLC members to ensure they are prepared for all outcomes, including the orderly winding down of their company.
- In my opinion, the dissolution of an LLC in Kentucky is as important as its formation, marking the responsible conclusion of a business's lifecycle.
6 Steps To Dissolving an LLC in Kentucky
To dissolve a Kentucky limited liability company, you must complete the following steps:
1. Vote to Dissolve the LLC
Initiating the dissolution of an LLC in Kentucky starts with a formal vote among the members. You have to carefully review your operating agreement to determine the required majority for the vote.
In our case, it was a supermajority, which meant we needed more than just a simple majority.
Documenting this decision in the meeting minutes or a written consent form is crucial for legal compliance and serves as an official record of the members' agreement to dissolve.
2. Notify Creditors About Your LLC's Dissolution
Notifying creditors is a step that requires tact and precision.
In our dissolution process, we drafted a formal notice that outlined the dissolution and provided clear instructions for creditors to submit their claims.
You must also set a reasonable deadline, which is typically 120 days in Kentucky, for creditors to make their claims.
This step is not just a legal formality; it's about maintaining good relationships with creditors, which proved beneficial for us in our future business endeavors.
3. File Final Tax Returns and Obtain Tax Clearance
Filing final tax returns can be more complex than anticipated, a reality reflected in the closure of 9,764 Kentucky establishments between March 2021 and March 2022, as reported by the US Small Business Administration . This underscores the critical nature of settling all tax liabilities during dissolution.
You have to ensure that all tax liabilities are settled, including state and federal taxes.
In our case, obtaining a tax clearance from the Kentucky Department of Revenue was a critical step, as it confirmed that our LLC had no outstanding tax obligations.
This clearance was essential for the formal dissolution process and required meticulous financial review and reporting.
4. File Articles or Certificate of Dissolution
Filing the Articles of Dissolution with the Kentucky Secretary of State marks a significant milestone in the dissolution process.
This document, which officially ends the LLC's legal existence, requires accurate details about your LLC and the dissolution process.
You can file the Articles of Dissolution with the Kentucky Secretary of State by mail or in person . This document will also be the reason for dissolving the LLC, as well as any other relevant information.
Once you've completed these steps, your LLC will be officially dissolved.
5. Distribute Assets
Distributing the remaining assets is a delicate process, especially if your LLC has both tangible and intangible assets.
You must follow the ownership percentages outlined in your operating agreement, ensuring each member receives their fair share.
In our case, this step required a clear understanding of the value of our assets and careful accounting.
6. Close All Accounts and Cancel Licenses and Permits
The final step involves closing all business accounts and canceling licenses and permits.
We meticulously went through each account and license, ensuring everything was properly closed or canceled.
This step is crucial to avoid future liabilities or misunderstandings about the status of any business. It marks the end of your LLC's operational existence and is a moment of closure for all members.
How Long Does It Take To Dissolve a Kentucky LLC?
It takes about 3-5 business days to dissolve a Kentucky LLC. The exact timeframe depends on a few factors, such as how busy the Secretary of State's office is and how quickly you complete the necessary paperwork.
How Much Does It Cost to Dissolve an LLC in Kentucky?
It costs about $40 to dissolve an LLC in Kentucky, which covers the articles of dissolution. Filing fees include a check made payable to the Kentucky State Treasurer. The overall cost of dissolving an LLC varies depending on the case.
Do I Have to Publish a Notice of Dissolution of Kentucky LLC?
No, you are not required to publish a notice of dissolution of Kentucky LLC. However, it is advisable to do so to provide notice to creditors and other interested parties of the dissolution of the company.