How to Dissolve an LLC in Oregon? (Step by Step Guide)
If you are a business owner and have decided that it is time to dissolve your Oregon LLC or plan on future business ventures, you can do so through Voluntary Dissolution.
There are steps you should take to ensure that the process goes as smoothly as possible.
As a seasoned business and legal advisor, I’ll walk you through the process of how to legally dissolve your Oregon limited liability company based on research, precedent, and personal experience.
Quick Summary
- To dissolve an LLC in Oregon, it is necessary to consult the operating agreement and follow all state requirements, including legal and financial obligations.
- Your Oregon business should close all tax accounts and file Articles of Dissolution to make the process official.
- The Bureau of Labor Statistics reports that 20.8% of U.S. private sector businesses fail within the first year, with rates increasing to 48.4% after five years and 65.1% after ten years, highlighting the challenges businesses face over time.
- Based on personal experience, ensuring thorough communication with creditors and stakeholders during the dissolution process is critical for a seamless transition and to mitigate future liabilities.
6 Steps to Dissolving an LLC in Oregon
The steps to dissolving an LLC in Oregon entail the following:
Step 1: Vote to Dissolve the LLC
The first and most important step in dissolving your Oregon LLC (Domestic or Foreign LLC) is to follow the voting dissolution provisions of your Oregon LLC operating agreement.
During our dissolution, our Oregon business' operating document outlined how the voting would take place, member participation, and voting requirements.
These provisions may require a majority dissolution vote by LLC members, or they may allow for the voluntary dissolution of the LLC.
If your Oregon LLC does not have an operating agreement, you can still dissolve the company, but you will need to follow state laws.
Under the Oregon LLC Act, a unanimous vote of the LLC members is required to approve the dissolution.
Step 2: Notify Creditors About Your LLC's Dissolution
Once the decision to dissolve is made, the Oregon LLC must inform its creditors of the impending dissolution.
This step is vital to protect the LLC and its members from future liability and to ensure all outstanding debts are addressed.
The notification should include a clear statement that the LLC is dissolving and a request for the submission of claims.
In our case, the notice also included a deadline for submitting these claims; this is typically set by Oregon state law.
This proactive approach was especially pertinent considering that between March 2021 and March 2022, as per the U.S. Small Business Economic Profile, 15,528 Oregon establishments closed, highlighting the broader economic challenges businesses faced [1].
It's also important to provide a mailing address where creditors can send their claims. This process helps in settling debts and obligations in an orderly manner, ensuring creditors are treated fairly.
Step 3: File Final Tax Returns and Obtain Tax Clearance
Close all your business tax accounts and business records associated with your LLC, including any state or federal tax accounts.
When we were handling this step of our dissolution, we also contacted the Oregon Department of Revenue and requested a final tax return be filed for our LLC.
Once the final tax return has been filed, you will also need to pay any outstanding taxes that are owed.
The Bureau of Labor Statistics highlights the importance of addressing tax obligations promptly, revealing that 20.8% of U.S. private sector businesses fail in the first year, 48.4% within five years, and 65.1% by the tenth year, illustrating the significant economic effects on businesses and individuals alike [2].
Oregon somehow doesn't require you to obtain tax clearance when dissolving your LLC. However, before dissolving your business entity, make sure that all minimum business taxes have been paid to help you avoid any legal issues in the future.
Step 4: File Articles or Certificate of Dissolution
File Articles of Dissolution with the Oregon Secretary of State Corporation Division by mail, fax, or in person [3].
During our filing, we submitted the Certificate of Dissolution online and paid the $100 processing fee via a credit card to the Oregon Secretary of State.
When filing your Articles of Dissolution, you will need to include the following information:
- Oregon business name and address
- The date of dissolution
- The names and addresses of the LLC members
- Reasons for dissolution
Step 5: Distribute Assets
In Oregon, the dissolution of an LLC and the distribution of its assets involve first settling all debts and liabilities, followed by the liquidation of the remaining assets.
"In the process of winding down your Oregon LLC, it's necessary to sell or allocate assets like machinery, inventory, and more. Additionally, it's important to communicate with suppliers, customers, and other crucial stakeholders."
-Jon Morgan, Co-Founder and Co-Chief of Venture Smarter
The distribution process must adhere to the stipulations of the LLC's operating agreement or, in its absence, follow Oregon state law.
Our LLC assets were typically distributed among members based on their ownership interests, as outlined in our operating agreement.
Accurate records of all transactions, including debts settled, assets liquidated, and distributions made, are essential for legal and tax purposes.
Members should be aware of the potential tax implications of receiving asset distributions and consulting a tax professional is advisable for compliance.
Step 6: Close All Accounts and Cancel Licenses and Permits
The last phase of winding up an LLC in Oregon entails the termination of all its business-related accounts and the revocation of any licenses or permits.
This encompasses shutting down bank accounts, credit facilities, and other financial accounts linked to the company.
When completing this step, we also formally revoked all business licenses and permits to avert any continuing responsibilities or liabilities.
This crucial step is instrumental in averting potential legal or financial issues, signifying the finalization of the dissolution procedure.
FAQs
How Much Does It Cost to Dissolve an LLC in Oregon?
It costs $100 to dissolve an LLC in Oregon which covers filing the Articles of Dissolution. A business confirmation copy can be sent for an additional $5.
How Long Does It Take to Dissolve an LLC in Oregon?
It takes around a few weeks to a couple of months to dissolve an LLC in Oregon. It all depends on the complexity of your business and the number of outstanding debts and liabilities that need to be settled.
Is There a Deadline for Dissolving an LLC in Oregon?
While there is no specific deadline for dissolving an LLC in Oregon, it is advisable to update business records as soon as you can to ensure compliance with state regulations.
References:
- https://advocacy.sba.gov/wp-content/uploads/2023/11/2023-Small-Business-Economic-Profile-OR.pdf
- https://www.bls.gov/bdm/bdmage.htm
- https://sos.oregon.gov/business/Pages/articles-of-dissolution-form-instructions-corporation.aspx
