How to Dissolve an LLC in Louisiana? (Step by Step Guide)
There are several reasons business owners may opt to dissolve a Louisiana LLC. This is referred to as voluntary dissolution, and there are specific steps needed to complete the process.
As part of a team of legal experts with over 10 years of experience, I will provide you with a comprehensive guide on how to dissolve an LLC in Louisiana, as well as the reasons why someone might choose to do so.
Quick Summary
- To dissolve an LLC in Louisiana, comply with the operating agreement provisions and adhere to state requirements.
- An LLC in Louisiana may be dissolved based on the decision of the members or due to state sanctions.
- Given the high rate of business failure in Louisiana, with Lending Tree reporting a 25% failure rate compared to the nationwide average of 20.8%, understanding the dissolution process is crucial for LLC in the state.
- In my view, the dissolution steps for an LLC in Louisiana underscore the importance of having a solid operating agreement and a clear exit strategy.
6 Steps to Dissolving an LLC in Louisiana
There are specific steps to dissolve limited liability company entities, and they must be followed to formally terminate the business.
Step 1: Vote to Dissolve the LLC
The first step in dissolving a Louisiana LLC is to notify all LLC members to hold a dissolution meeting. This is where the LLC members will discuss and vote on the motion.
"All LLC members must approve the dissolution for it to move forward. However, the dissolution vote doesn't have to be unanimous if the conditions are indicated in the operating agreement."
-Jon Morgan, Co-Editor & Co-Founder of Venture Smarter
In our case, it was important to consult our Louisiana LLC operating agreement and ensure that everything was done correctly; we had a unanimous vote and proceeded with the dissolution.
Step 2: Notify Creditors About Your LLC's Dissolution
Before a business owner can proceed with the dissolution process, they must notify all known creditors and lenders. These creditors have 180 days from the date of notification to file a claim with the company.
All our business debts were paid off before our LLC could be dissolved. This was to protect the business owners and members from being personally liable for the company's debts.
If you're not sure if you have any outstanding business debts or contingent liabilities, it's a good idea to consult with a business accountant or attorney to help you figure out what needs to be paid.
Step 3: File Final Tax Returns and Obtain Tax Clearance
In light of the fact that the US Small Business Administration noted 13,092 Louisiana establishments closed between March 2021 and March 2022, ensuring your LLC's taxes are fully settled becomes even more significant [1].
This step is not just a legal formality but a crucial part of responsibly winding down your business in a state with a high closure rate.
An LLC must have a Tax Clearance Certificate before it can be dissolved.
All tax liabilities must be paid before a limited liability company can be dissolved in Louisiana. These include income taxes (federal and state), sales taxes on taxable goods, and payroll taxes.
During our dissolution, once all our outstanding taxes were paid, the company became eligible to obtain tax clearance from the Louisiana Department of Revenue.
The Tax Clearance Certificate verifies that the LLC has no outstanding taxes.
Step 4: File Articles or Certificate of Dissolution
The Louisiana Secretary of State office requires every Louisiana LLC to file an Affidavit to Dissolve a Limited Liability Company.
The document will enable you to obtain the Certificate of Dissolution from the state.
In our case, the attached affidavit contained our business name, the formal date the dissolution process was authorized, and the signature of a company representative.
According to Louisiana state law, the Certificate of Dissolution is your proof that the LLC has been dissolved.
The Louisiana Secretary of State charges a filing fee of \$100 for the Louisiana LLC Articles of Dissolution.
Step 5: Distribute Assets
In Maine, the process begins with settling all debts and obligations, ensuring that creditors are paid before any distribution to members.
This is followed by a proportional distribution of remaining assets based on each member's share in the LLC, as outlined in the operating agreement or state law if the agreement is silent on this matter.
In our case, we had to engage a legal expert to navigate the complexities of Maine's specific regulations, ensuring compliance and fairness in the distribution.
The experience highlighted the importance of having a clear and detailed operating agreement, as it significantly streamlined the dissolution process and minimized disputes among members.
Step 6: Close All Accounts and Cancel Licenses and Permits
LLCs in Louisiana that are in the process of dissolution must close all business accounts. These include bank accounts, credit cards, and merchant services.
To close our business account, we had to provide the financial institution with a copy of the LLC Certificate of Dissolution from the Louisiana Secretary of State.
You must also contact the relevant authorities and cancel any business and professional licenses and permits that you LLC holds.
It's important to remember that a limited liability company cannot continue to conduct business in Louisiana once it has been dissolved. If the company violates this rule, it could face legal consequences.
Unliquidated assets, such as real estate, must be legally transferred to the LLC members or another qualified business entity. This is done by filing a transfer of property form with the Louisiana Secretary of State [2].
FAQs
How Long Does It Take To Dissolve an LLC in Louisiana?
It takes about two weeks to dissolve an LLC in Louisiana. However, the state can process your dissolution in one to three days if you request expedited processing at an additional fee.
Can I Dissolve a Foreign LLC in Louisiana?
Yes, you can dissolve a foreign LLC in Louisiana. The process is similar to dissolving a domestic LLC, but some additional steps are involved. You will need to file an affidavit of withdrawal with the Louisiana Secretary of State and publish notice of the dissolution in a local newspaper of general circulation.
How Much Does It Cost to Dissolve an LLC in Louisiana?
It costs \$75 to dissolve an LLC in Louisiana. The fee covers the processing of the dissolution papers.
How Do I Close My Louisiana Sales Tax Account?
To close your Louisiana sales tax account, you'll need to file a final return. IRS Form 720 is used to report final tax liabilities and request your sales tax account termination. The return must be filed within 60 days of dissolving your LLC.
References:
- https://advocacy.sba.gov/wp-content/uploads/2023/11/2023-Small-Business-Economic-Profile-LA.pdf
- https://www.sos.la.gov/BusinessServices/FileBusinessDocuments/Pages/default.aspx
