How to Dissolve an LLC in Ohio? (Step-By-Step Dissolution)
If you are the owner of an Ohio LLC and have decided that it is time to dissolve the company, you will need to take the necessary steps.
As a seasoned business advisor specializing in limited liability companies, I will guide you on how to dissolve an LLC in Ohio. The comprehensive article is based on research, backed by legal information, and enriched by personal experience.
Quick Summary
- To dissolve an LLC in Ohio, consult the operating agreement and follow state requirements, including holding a dissolution meeting and voting by LLC members.
- All interested parties must be notified of the LLC's dissolution via a written notice.
- Ohio witnessed a 17.2% decrease in private-sector employment in the year ending April 2020, underscoring the economic challenges for small businesses.
- From personal experience, navigating the dissolution process with diligence and attention to legal details has proven essential for effectively closing an LLC without future liabilities.
6 Steps to Dissolve an LLC in Ohio
To close an LLC in Ohio, there is a procedure to formally and legally dissolve the business.
Here is a rundown of the steps to follow when dissolving an Ohio LLC.
Step 1: Voting to Dissolve the LLC
Your Ohio LLC operating agreement will specify how to start the dissolution process. That usually requires holding a dissolution meeting and voting by LLC members.
The LLC's operating agreement should outline the voting procedure and the required majority for significant decisions.
It's important to document this decision in the form of a written resolution, as it serves as an official record of the members' intent to dissolve the LLC.
This step is crucial for both legal compliance and for initiating the dissolution process in an organized manner.
Step 2: Notify Creditors About Your LLC's Dissolution
Creditors, banks, lenders, and parties with interest in the company should be notified of the dissolution.
You can send a written notice that your LLC will no longer conduct business in Ohio to allow creditors to file a claim with the company.
Business debts should be settled before finalizing the dissolution, either by selling LLC assets or using money from the LLC's bank account.
According to the U.S. Bureau of Labor Statistics, in the year ending April 2020, Ohio witnessed a 17.2% decrease in private-sector employment, highlighting the challenges faced by small businesses [1].
Unlike other states, Ohio does not have a specific requirement for how much time must pass before creditors can no longer make claims against dissolved LLCs and corporations.
However, it is recommended to wait until at least 60 days after notice has been sent to third parties (as recommended by the Ohio Secretary of State).
When sending the notice to the creditors, make sure to include your full business name, mailing address, and the effective date of the dissolution.
Step 3: File Final Tax Returns and Obtain Tax Clearance
Close all LLC accounts, including sales tax, withholding tax, and corporation franchise tax by filing the final sales tax return and other required forms with the Department of Taxation.
Any outstanding tax obligations or fees must also be paid in full to obtain a tax clearance before the LLC can be considered dissolved.
File Form 1065 with the Internal Revenue Service and check the "final return" box. Minimum business taxes must be paid in full to obtain tax clearance.
Step 4: File Articles or Certificate of Dissolution
File the Articles of Dissolution (the Certificate of Dissolution) with the Ohio Secretary of State by mail or in-person to avoid potential delays [2].
You can also submit the document online by visiting the SOS website.
Fill in all required fields on the form and pay the applicable filing fee.
The dissolution form must contain the following:
- Limited Liability Company name
- Registered Agent
- The formal date of dissolution
- Signature of an authorized LLC representative
After your articles are processed, the SOS will send you a Certificate of Dissolution (or "Certificate of Termination" if your company is still in good standing). This document confirms that your LLC has been officially dissolved.
Step 5: Distribute Assets
Following the formal filing, the LLC must distribute its remaining assets. This is done after paying off all debts and obligations.
The distribution should be in accordance with the LLC's operating agreement or, in the absence of such an agreement, in line with Ohio's LLC laws.
Typically, assets are distributed to members based on their ownership percentages or as otherwise agreed upon.
Step 6: Close All Accounts and Cancel Licenses and Permits
Close all bank and tax accounts as soon as the LLC is dissolved, including credit cards and any other lines of credit your business may have.
Closing business bank accounts will give LLC members access to the company's funds and liquidate the LLC assets before it is dissolved.
In the context of Ohio's economic climate, as of November, there was a marginal decline in job numbers to 5,653,300 from October's 5,658,600, with the unemployment rate holding at 3.6%, according to the Ohio Department of Job and Family Services [3]. This stability in unemployment rates amidst job fluctuations underscores the importance of careful financial and operational wind-down procedures for businesses concluding their activities.
Your Ohio registered agent (statutory agent) should be able to help you close business and tax accounts.
Additionally, any licenses or permits held by the LLC for business operations must be formally canceled. This step is important to prevent future liabilities and to ensure that the LLC is completely wound up in a legal and orderly manner.
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FAQs
How Much Does It Cost to Dissolve an LLC in Ohio?
It costs $50 to dissolve an LLC in Ohio which covers filing the Articles of Dissolution. Some companies may be taxed on their income when they dissolve in Ohio, and it could set back the company a few hundred dollars.
How Long Does It Take to Dissolve an LLC in Ohio?
It takes around a week to dissolve an LLC in Ohio, but expedited service options are available - $100 for two business days, $200 for one business day, and $300 for four hours.
How Do I Dissolve a Foreign LLC in Ohio?
To dissolve a foreign LLC in Ohio, it is necessary to file the Cancellation of Foreign LLC form with the Ohio Secretary of State.
How Do I Close My Ohio Sales Tax Account?
To close your Ohio commercial activity tax account, file a final return and select ‘cancel my account’ through the Ohio Business Gateway website.
References:
- https://www.bls.gov/ces/
- https://www.ohiosos.gov/globalassets/business/forms/561.pdf
- https://jfs.ohio.gov/job-services-and-unemployment/job-services/job-programs-and-services/submit-a-warn-notice/current-public-notices-of-layoffs-and-closures-sa/current-public-notices-of-layoffs-and-closures
