How to Dissolve an LLC in Mississippi? (2024 Guide)
If you are a business owner and want to dissolve your Mississippi LLC, you will need to take the appropriate steps to ensure the process goes smoothly.
As a certified LLC expert with over thirteen years of business and legal experience, I will outline the steps you need to take to dissolve an LLC in Mississippi.
I will also provide some tips on making the dissolution process easier for you.
- To dissolve an LLC in Mississippi, members must first hold a formal vote as per the operating agreement or state law.
- Members are required to file final tax returns and close all tax accounts with the Mississippi Department of Revenue to obtain a tax clearance certificate.
- The dissolution process becomes particularly relevant in Mississippi, where the first-year business failure rate stands at 20.7% and escalates to 65.6% within a decade, underscoring the need for strategic exit planning.
- Personally, I view the dissolution of an LLC not as a failure, but as a strategic move that can pave the way for future opportunities, particularly in a state with high business turnover like Mississippi.
6 Steps to Dissolving an LLC in Mississippi
When dissolving your Mississippi LLC you must follow the right steps and the terms of your LLC's operating agreement.
Step 1: Vote to Dissolve the LLC
The initial step in closing an LLC in Mississippi involves a formal vote by the LLC members.
Our process was generally guided by our LLC's operating agreement, which detailed the voting procedure and the majority needed for such decisions.
In cases where the operating agreement doesn't offer guidance, Mississippi state law usually has a standard procedure in place.
"Under Mississippi law, an unanimous vote and written agreement from all LLC members are required for the dissolution to be valid."
-Jon Morgan, Co-Editor & Co-Founder of Venture Smarter
We also documented our decision in a written resolution, as it officially records the members' agreement to close the LLC.
Step 2: Notify Creditors About Your LLC's Dissolution
Inform creditors, financial institutions, and other relevant parties about the LLC's closure by sending a notice.
This notice should include the dissolution date and a statement outlining the period available to resolve outstanding claims.
Creditors who fail to respond within the specified period may forfeit their right to claim any unpaid debts from the Mississippi LLC.
These debts will be considered settled, and the LLC will no longer be responsible for them.
In our case, there were a few creditors who challenged the dissolution, so they presented adequate proof of their claim against the LLC.
Once we verified that these claims were legitimate, our business was obligated to settle the debts before completing the dissolution process.
Step 3: File Final Tax Returns and Obtain Tax Clearance
After you have followed the procedures outlined in your LLC's operating agreement or Mississippi law, you must close all tax accounts with the Mississippi Department of Revenue.
Every active Mississippi LLC has various tax accounts that are maintained by different departments within the Mississippi State government. This includes business, sales, and withholding tax accounts.
To close our business tax account, we needed to submit a final return and pay any outstanding taxes owed.
You can also close your sales and withholding tax accounts by filing a final return and paying any taxes owed.
Once you have closed all tax accounts, you will need to obtain a tax clearance certificate from the Mississippi Department of Revenue.
Step 4: File Articles or Certificate of Dissolution
If you have a domestic Mississippi LLC, you'll need to file the Mississippi LLC Articles of Dissolution with the Mississippi Secretary of State's office . The Certificate of Dissolution must be signed by a majority of the LLC members and must include:
- The LLC's name and date of formation
- The effective date of dissolution
- A majority approved the dissolution of the members
- The signature of the person authorized to dissolve the limited liability company
We filed ours online by creating a corporate filing account with the Mississippi Secretary of State and completing the dissolution online.
The filing fee is $50 and can be paid by credit card, check, or money order.
Step 5: Distribute Assets
In the process of closing an LLC in Mississippi, systematically shutting all business accounts becomes even more significant against the backdrop of the US Small Business Administration's report that 5,524 businesses closed from March 2021 to March 2022, emphasizing the need for meticulous financial and legal closure to avoid future liabilities .
Members must first use the company's assets to pay off all debts and obligations.
After settling debts, they should comply with the specific provisions outlined in the LLC's operating agreement regarding asset distribution.
If the operating agreement doesn't specify, members should follow Mississippi state law, which typically involves distributing remaining assets proportionally based on each member's ownership interest.
It's important to ensure that all distributions are fair and equitable, reflecting each member's contribution and stake in the LLC.
Finally, members must document the distribution process and decisions to maintain transparency and legal compliance during the dissolution.
Step 6: Close All Accounts and Cancel Licenses and Permits
When closing an LLC in Mississippi, members should systematically close all business accounts, including bank and credit accounts, to prevent future liabilities.
You must also cancel any business licenses or permits to avoid ongoing obligations or legal issues associated with the inactive LLC.
This process involves notifying the relevant licensing agencies and fulfilling any formalities required for cancellation.
It's crucial to obtain written confirmations of account closures and license cancellations for record-keeping.
- Top Registered Agents in Mississippi
- How to Open an LLC in Mississippi
- Mississippi LLC Check
- Mississippi LLC Filing Services
How Much Does It Cost to Dissolve an LLC in Mississippi?
The filing fee for Mississippi LLC dissolution usually costs $50. If you are dissolving a foreign LLC, the filing fee is $250.
What Will Happen If I Don’t Properly File for Dissolution, Abandon the Company and File Annual Reports?
If you don't properly file for dissolution or abandon your LLC company and file annual reports, you may be subject to business privilege tax, as well as any tax liabilities that the LLC has. Additionally, the members of the LLC may be personally liable for any debts or obligations of the LLC. Finally, if you have a registered agent service, you will need to remove your business from the service.
How Long Does It Take to Dissolve an LLC in Mississippi?
It takes 2-3 days to dissolve an LLC in Mississippi if you submit the documents by mail. The SOS takes 24 hours to process dissolution papers submitted online.