How to Dissolve an LLC in North Carolina? (In-Depth Guide)

Published by Delina Chantel Yasmeh | Author

Last updated: February 19, 2024

FACT CHECKED by Lou Viveros, Growth & Transition Advisor

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When the members of an LLC in North Carolina collectively decide to terminate the company, certain steps must be taken to finalize the dissolution.

As I've collaborated with entrepreneurs and legal experts in the business industry, I gained insights into the ways you could legally dissolve an LLC in North Carolina.

This review includes all the procedures you should follow for the dissolution to be approved by the state.

Quick Summary

• To dissolve an LLC in North Carolina, consult the operating agreement and follow state requirements before submitting it to the North Carolina Secretary of State.
• During dissolution, you must close all business and tax accounts and file Articles of Dissolution.
• The economic landscape in North Carolina presents a favorable environment for entrepreneurs, with, as per Ibis World, a 2.7% business growth rate from 2018 to 2023 and a stable unemployment rate of 3.5% in 2023, suggesting resilience and opportunities post-dissolution.
• In my view, equitably distributing remaining assets to LLC members after settling liabilities is crucial for concluding the business relationship on a positive note.

6 Steps to Dissolving a North Carolina LLC

A limited liability company in North Carolina has to go through several steps to dissolve a North Carolina LLC, as per Secretary of State guidelines [1].

These steps primarily include notifying the members of the dissolution, consulting the North Carolina LLC operating agreement, settling all LLC liabilities, and filing the dissolution documents with the North Carolina Secretary of State, Corporations Division.

Step 1: Vote to Dissolve the LLC

To vote on dissolving a North Carolina LLC, the process typically begins with a meeting of the LLC members, where the dissolution is proposed.

The specific voting requirements for dissolution, such as a simple majority or a supermajority, should be outlined in the LLC's operating agreement.

During the meeting, members cast their votes, and if the necessary threshold for approval is met, the vote to dissolve is passed.

It's important to document this decision formally in the meeting minutes or a written resolution, as this serves as an official record of the members' agreement to dissolve the LLC, a crucial step in the dissolution process.

Step 2: Notify Creditors About Your LLC's Dissolution

Before the official termination of your North Carolina business, notify all lenders, creditors, and clients about the dissolution.

A North Carolina LLC is legally responsible for any debt and contractual obligations it has. When an LLC is dissolved, the responsibility for repaying those debts doesn't automatically go away.

Notifying your creditors and lenders about your dissolution is crucial because it allows them to file any claims against the company before assets are distributed among members. If you fail to notify them, there might be some additional penalties.

To notify your lenders and creditors of your LLC's dissolution, you will need to prepare a notice. Make sure to include the following:

• Business name
• The effective day of the North Carolina LLC dissolution
• The effective date on which you will be distributing any remaining assets to members.

You can also include your business address, phone number, and email address in case they need to contact you with additional questions or concerns.

Once the notice is complete, send it by certified mail with the return receipt requested. In some cases, you might also be required to publish the notice in a local newspaper or other publication.

Step 3: File Final Tax Returns and Obtain Tax Clearance

Close LLC tax accounts associated with your North Carolina LLC, including federal taxes, state taxes, payroll taxes, sales tax (if your LLC used to sell taxable goods), and other relevant accounts.

If you fail to properly close all of your LLC's tax accounts, you could end up owing money years down the road.

Outstanding taxes can also cause serious problems when trying to re-open a North Carolina LLC.

Make sure you work with an accountant or other professional service provider to close all of your LLC's tax accounts properly.

Minimum business taxes still apply during the process of dissolution, so make sure you factor that into your plans.

Step 4: File Articles or Certificate of Dissolution

File Articles of Dissolution with the North Carolina Secretary of State, Corporations Division, by filing the dissolution form you can download on their website.

The Articles of Dissolution for your limited liability company have to contain the business name, mailing address, effective date, the name and address of the registered agent, and the signature of a manager or member. The filing fee is $30.

After you file Articles of Dissolution, make sure to send copies to all involved parties, including your local county clerk's office, the Internal Revenue Service (IRS), and the North Carolina Department of Revenue.

"In North Carolina, dissolving an LLC typically requires 3 to 5 business days following the submission of the Articles of Dissolution to the Secretary of State. Expedited processing can be arranged for an additional charge."

-Jon Morgan, Co-Founder & Chief Editor of Venture Smarter

Step 5: Distribute Assets

To distribute assets during the dissolution of a North Carolina LLC, begin by settling all outstanding liabilities, including debts and obligations to creditors, following the priority established by law.

Once all liabilities are cleared, the remaining assets should be distributed to the LLC members per their ownership interests or as stipulated in the LLC's operating agreement.

This distribution should be conducted in a manner that respects the proportionate shares or specific terms agreed upon by the members.

Step 6: Close All Accounts and Cancel Licenses and Permits

To close all accounts and cancel licenses and permits for a North Carolina LLC, start by finalizing the company's financial affairs.

This includes closing all business bank accounts, settling any outstanding balances, and ensuring all financial obligations are met.

Next, contact the relevant agencies to cancel any business licenses, permits, or registrations that the LLC holds; this is crucial to avoid ongoing liabilities or legal issues associated with these authorizations.

Finally, inform the North Carolina Secretary of State and other relevant state and federal agencies of your LLC's dissolution to officially end your business's legal and tax obligations, completing the closure process in a compliant and orderly manner.

Reflecting on an LLC's dissolution, North Carolina's economic outlook remains bright. According to Ibis World, the state's business sector flourished with a 2.7% growth rate from 2018 to 2023, indicating a robust support system for both new and established businesses [2].

Moreover, a stable unemployment rate of 3.5% in 2023 further highlights the state's economic resilience and the abundance of opportunities for those emerging from business closures.

This vibrant economic environment underscores North Carolina's capacity to foster new ventures and job prospects.

FAQs

References:

1. https://www.sosnc.gov/divisions/business_registration/closing_nc_business
2. https://www.ibisworld.com/united-states/economic-profiles/north-carolina/