Suppose you're a business owner and have decided to dissolve your Vermont Limited Liability Company. In that case, there are a few things you need to do in order to make the dissolution process go as smoothly as possible, including fulfillment of several financial, business, and legal matters.
In this article, we'll give you a rundown of the steps you need to take and the paperwork you'll need to file. Let's get started!
Step 1: Follow Your Vermont LLC Operating Agreement
A Vermont LLC operating agreement is a comprehensive guide document obtained when you formed a Limited Liability Company as a company organization. It covers all information from the day-to-day operations of a Vermont limited liability company to the termination procedure.
While company dissolution requirements are different in every state, LLC dissolution may generally require the following steps:
- Hold a meeting of LLC members and vote on LLC dissolution;
- Record the dissolution vote with the minutes of the board meeting;
- Determine the formal date of dissolution;
- Identify and distribute assets of a dissolved LLC to stakeholders and members accordingly;
- Notify all known creditors and claimants to settle any business debts and other financial obligations
The operating agreement for the majority of Vermont LLCs outlines all of the processes for LLC dissolution. Otherwise, you may consult the Vermont Secretary of State for further instructions.
Step 2: Close All Business and Tax Accounts
Vermont LLCs are not required to acquire a tax clearance certificate before dissolving. While this is true, it is nevertheless critical to ensure that there isn't anything still owed on behalf of the Limited Liability Company before the date of dissolution. Doing so prevents any tax obligations from being unfulfilled and risks fines or other penalties, like a Notice of Federal Tax Lien or a Notice of State Tax Lien.
Some of the common taxes that an LLC may owe are:
- Sales & Use Tax Accounts
- Employee Withholding Tax Accounts
- Unemployment Insurance Tax Accounts
- State Income Tax Accounts
- Local Tax Accounts
Closing these tax accounts is usually done by completing a final tax return with the concerned tax agency, although some accounts may require additional file paperwork. Other taxes to consider:
- Federal Taxes
- Personal Income Taxes
- Franchise Taxes
Business Account Clearance
Dissolving an LLC also entails closing all bank accounts, canceling contracts, collecting final payments, withdrawing leases, and perhaps terminating any licenses in the state ascribed to your company. This will safeguard both your reputation as a business entity and your finances.
Step 3: File Vermont LLC Articles of Dissolution
After completing the prerequisites, you must file the Vermont Articles of Termination with the Vermont Secretary of State online.
The application form is available for request at the Secretary of State Website of Vermont state website. You have to download that pdf form and fill in all the important and legal information in the form.
Once done, choose the mode of payment you want to use to pay the filing fee of $20.
You can send the form by mail, drop it off in person, or file it online, whatever is most convenient for you.
Reasons for Vermont LLC Dissolution
There are many reasons people would want to dissolve a Vermont Limited Liability Company. When it is evident that the company is heading downhill, it is often necessary to make a voluntarily difficult yet important decision such as this.
One thing is for sure, though, businesses consider and study numerous variables before taking the direction of Vermont LLC dissolution. Below are some of them:
- If the company's owners lack marketing competence, they must dissolve.
- If manufacturing expenses are growing and there is no profit to cover the charges.
- Excessive business debt levels on the balance sheet.
- The owners cannot keep up with the resource spending.
- Inability to meet the demands of the company's most essential and critical clients.
What is the Cost to Dissolve a Vermont LLC?
If you're considering dissolving a domestic Vermont LLC, you're probably curious about the process and what it will require of you. Whether you’re filling out and filing the necessary forms yourself or with a professional service provider, dissolving your LLC is relatively simple.
In Vermont, Articles of Dissolution or Articles of Termination must be correctly submitted to the Corporations Division of the Vermont Secretary of State. Several filing options are available, including mail, in-person drop, and online filing. Regardless, all documents must have original signatures.
Once you've determined the formal date of LLC dissolution, you must contact the Vermont Secretary of State to file dissolution documents.
In Vermont, companies are required to file all necessary paperwork with the Secretary of State, whether for registration or termination, and notify them of any recurring obligations, such as taxes or Vermont annual report requirements. Failure to comply will result in extra fines and penalties.
After dissolving your Limited Liability Company in Vermont, it is important to notify the Secretary of State that you no longer need any business entities and permits or bank accounts.
The duration of Vermont LLC dissolution depends on the steps you need to accomplish. However, you should already expect the approval to take many weeks to complete. The Vermont Secretary of State's office alone may take several weeks to process your paperwork.
So, when you have a target date for dissolving your LLC, carefully planning ahead will be an advantage on your side.
You must also pay annual reports and taxes for the remainder period the firm is in operation. This means that dissolving an LLC in Vermont should only be done if you have no intention of doing business in the state again.
After Dissolving Your Vermont LLC
In addition to being officially out of business, Vermont State will no longer reserve your business name once you formally dissolve your LLC. After 120 days, any other company organization will be able to utilize your Vermont LLC name.
Meanwhile, having a foreign LLC in another state will require you to follow the SOS of that state when your LLC in Vermont is dissolved. You may hire a Vermont registered agent to assist you with this.
How Much Is the Filing Fee to Dissolve an LLC in Vermont?
There is a filing fee of $20 to be paid for the Articles of Dissolution due to the Vermont Secretary of State.
How Long Does It Take To Dissolve an LLC in Vermont Formally?
The timeframe will depend on the workload in the Vermont SOS office or the initial steps you need to accomplish, which includes board meetings, closing accounts, distributing assets, etc. But, generally, the Vermont Secretary of State usually takes around 3-5 business days to process the Articles of Termination once submitted.
Is It Necessary to Publish a Notice of Dissolution of the Vermont LLC?
While the State does not legally require a notice of dissolution, it is only fitting to notify anyone who owes you a payment or to whom you owe a payment. Similarly, evidence of publication may be beneficial later on if someone files a claim against your company after the Vermont LLC has been dissolved.
Do I Need a Tax Clearance Before Dissolving an LLC in Vermont?
No. The Vermont Secretary of State does not require business entities to obtain tax clearance before dissolving your Vermont LLC.
Dissolving a Vermont LLC: Conclusion
Dissolving an LLC in Vermont is not a task that any business would want but is something that needs to be done. Doing so requires 3 major procedures: following the Vermont LLC Operating Agreement, closing all business licenses and tax accounts, and finally submitting the Vermont LLC Articles of Dissolution.
While the dissolution of an LLC in Vermont may seem like a daunting task, by following these simple steps and planning ahead of the timeline you can ensure a smooth transition and termination of your Vermont LLC. We hope this article helped you better understand how to dissolve an LLC in Vermont.
If you are considering dissolving your Vermont LLC, be sure to consult with an experienced attorney who can walk you through the process and ensure that all necessary paperwork is filed correctly.