How to Dissolve an LLC in Utah? (A Complete Guide)
When a business is no longer profitable or when the owners want to move on to other ventures, dissolving your Utah LLC is often the best option.
As a seasoned expert in the industry, I'll share with you my insights on the dissolution process for your Utah LLC. I consulted legal advisors and business specialists in the state to provide you with all pertinent information you need.
We will explain each step of the process and highlight some of the reasons why LLC owners choose to dissolve their LLCs.
Quick Summary
- To dissolve an LLC in Utah, owners are required to consult the follow the company's operating agreement and comply with statutory requirements.
- File Articles of Dissolution with the Utah Division of Corporations & Commercial Code.
- A Utah LLC may be dissolved voluntarily or involuntarily.
Steps to Dissolving a Utah LLC
Steps to dissolving a Utah LLC entail careful planning and execution.
LLC members should be on the same page when it comes to dissolving the company. Once a majority vote to dissolve an LLC is achieved, they need to take the following steps.
Step 1: Follow the Utah LLC Operating Agreement
A Utah LLC operating agreement is one of the most important dissolution documents for any business entity operating in the state.
The Utah LLC operating agreement outlines the rules of a company, including dissolution terms and conditions.
For instance, certain LLC operating agreement options require unanimous support from all its members before dissolving a business entity, while others only need a majority vote.
If business entities don't have a Utah LLC operating agreement, they should follow the Utah LLC Act.
All members need to abide by the operating agreement to avoid costly litigation if one or more members decide not to follow the contract.
Step 2: Notify Interested Parties
A business owner is obligated to notify creditors, lenders, and other interested parties that their limited liability company will cease all business activities.
This notification should be done in writing and must include the effective date of the dissolution.
Creditors can claim business debts up to three months from the date of publishing.
Most creditors won't submit claims for business debts as long as they've been notified of the dissolution in writing; however, publishing a public notice is recommended for necessary legal protection.
All the assets of the LLC will be liquidated and distributed to creditors after these three months. The remaining assets at this time will be given to the members of the business.
LLC members must surrender business licenses and permits, and contact the local government and the appropriate agency to let them know about the dissolution of your Utah LLC.
Step 3: Close Your Business Accounts
To dissolve a Utah LLC, you must close all business and bank accounts.
Contact the bank and let them know that the account is associated with a closed LLC to help avoid any problems with the bank later on.
Step 4: Obtain Tax Clearance for the Utah LLC
Tax accounts belonging to a Utah LLC have to be closed to obtain clearance from the Utah Department of Revenue.
File a final tax return with the Internal Revenue Service (IRS). Tax obligations for the LLC will need to be paid in full before tax clearance can be granted.
You will need to fill out Limited Liability Company Form 966 and send it to the Utah State Tax Commission and Internal Revenue Service.
Utah Division of Corporations and Commercial Code doesn't insist on LLCs obtaining clearance. Still, any outstanding taxes that linger after the Utah LLC dissolution process ends will be passed on to the LLC's members.
Step 5: File Utah LLC Articles of Dissolution
The Articles of Dissolution for Utah LLCs must be filed with the Utah Division of Corporations & Commercial Code [1].
Utah Articles of Dissolution is a short document that contains the information necessary to dissolve your Utah LLC, including:
- Business name and address of your Utah LLC
- The date that dissolution was approved by members or managers
- The reason for dissolution (e.g., bankruptcy, death of a member, etc.)
- Any other relevant information
Utah Articles of Dissolution can be filed online or by mail.
A Fax Cover Letter and Utah Articles of Dissolution may be faxed to the Division of Corporations & Commercial Code at (801) 530-625.
To file Articles of Dissolution by mail, you will need to submit the following documents:
- Utah Articles of Dissolution Limited Liability Company form
- A Fax Cover Letter
- An Affidavit for Continuing Authority form
There is no filing fee for filing the Utah LLC dissolution articles during normal processing. However, if you want expedited processing, the state fees are $75.
Reasons to Dissolve an LLC in Utah
Reasons to dissolve an LLC in Utah may be voluntary or involuntary.
A business in Utah can either dissolve voluntarily, or the Utah Secretary of State can request its dissolution. In both cases, LLC assets need to be distributed, or business owners can choose to sell them before dissolving the LLC.
1. Voluntary dissolution of a Utah LLC
The following reasons may prompt you to dissolve a Utah LLC:
- The LLC entity's purpose has been completed
- There is a change in ownership of the business
- The owner (s) want to close their business due to financial issues or personal reasons
- The LLC is no longer profitable
2. Involuntary Dissolution of a Utah LLC
When LLCs fail to submit their LLC annual report in Utah, don't maintain a Utah registered agent, or have unpaid annual franchise taxes, the Utah Department of Commerce may dissolve the company.
All business debts and other liabilities incurred by the company remain in effect. Creditors can continue to pursue owners for payment of debts owed by the business.
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FAQs
How Much Does It Cost to Dissolve an LLC in Utah?
It costs $0 to dissolve an LLC in Utah since there is no filing fee when submitting the Articles of Dissolution. Expedited service is charged $75.
However, if you hire a professional service provider to help you with the dissolution, the filing fee would be higher.
Can I Dissolve a Foreign LLC in Utah?
You can dissolve a foreign LLC in Utah by filing an Application of Withdrawal of a Foreign Limited Liability Company and obtaining a tax clearance certificate to the Divisions of Corporations & Commercial Code.
How Long Does It Take To Dissolve an LLC in Utah?
It takes 5 to 7 days to dissolve an LLC in Utah. Expedited service reduces the time to 48 hours.
How Can I Cancel a Business License in Utah?
To cancel a business license in Utah, visit the agency that issued the document.
For example, selling taxable goods requires you to have a Sales Tax License. If you want to cancel it, you must contact the Utah State Tax Commission.
If you used an assumed business name (DBA), file a cancellation with the county clerk.
Can My Registered Agent Dissolve an LLC in Utah?
A registered agent can only dissolve an LLC in Utah if you give them the authority to do so. You can grant that authority by executing an LLC dissolution form in front of a notary public and filing it with the Division of Corporations.
Can an LLC in Utah Be Sued After It Is Dissolved?
An LLC in Utah can be sued after it is dissolved. A dissolved LLC may still face lawsuits and claims that resulted from events while it was an active business entity.
What Happens if a Company in Utah Doesn’t Dissolve?
If an LLC in Utah doesn't dissolve, it will be required to pay recurring fees and may be held personally liable for any of the company's debts or tax obligations.
Dissolving an LLC in Utah
Dissolving an LLC in Utah involves legal steps that must be followed to formally terminate the business. If you are not sure how to dissolve a Utah LLC or have trouble obtaining legal information, seek professional help.
A law firm can guide you through the process of dissolving your business entity so that it is legally dissolved according to all state laws.
We prefer to employ IncFile to complete the lengthy articles of dissolution filing process on behalf of our customers because it is a very time-consuming process.
References:
- https://corporations.utah.gov/wp-content/uploads/2021/09/dissolve.pdf
