How to Dissolve an LLC in Vermont? (Easiest Way Possible)
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 to make the dissolution process go as smoothly as possible.
I worked together with our certified team of LLC experts and researched the requirements and process of dissolving a Vermont LLC, 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.
Quick Summary
- To dissolve an LLC in Vermont, you must follow the terms of the operating agreement, vote on the decision, and file the dissolution papers.
- The state mandates that all creditors must be notified of the dissolution and given time to submit their claims.
- The 25.5% business failure rate in Vermont, surpassing the national average as shown by Lending Tree, underscores the importance of being prepared with a clear dissolution strategy for LLCs.
- In my view, the structured approach to dissolving an LLC in Vermont highlights the state's commitment to supporting business owners even in their final act of closure.
6 Steps To Dissolving an LLC in Vermont
Follow these steps to disband your Vermont business correctly:
Step 1: Vote to Dissolve the LLC
Considering the 2023 US Small Business Administration's report that 2,236 businesses in Vermont dissolved between March 2021 and March 2022, it's crucial for LLC members to be well-informed about the dissolution process [1].
The first step in dissolving an LLC in Vermont is typically a formal vote by the LLC members.
In our case, the requirements for this vote were outlined in our LLC's operating agreement.
"A Vermont LLC operating agreement is a comprehensive guide document obtained when you form 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."
-Jon Morgan, Co-Editor & Co-Founder of Venture Smarter
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: Notify Creditors About Your LLC's Dissolution
Compile a list of all the creditors of the LLC. This includes any entity or individual to whom the LLC owes money.
Remember to include lenders, suppliers, service providers, credit card companies, landlords, and any other parties with a claim against the LLC.
Draft a formal notice of dissolution which should include:
- The name of your LLC and its address.
- A statement that the LLC is being dissolved.
- A request for creditors to present their claims, including what information they should include in their claim.
- A deadline for submitting claims is often set by state law.
- A mailing address where claims should be sent.
- A statement that claims will be barred if not received by the deadline.
During our dissolution, we sent the dissolution notice to all identified creditors via certified mail with a return receipt requested.
This provides proof that the notice was sent and received.
Step 3: File Final Tax Returns and Obtain Tax Clearance
A tax clearance certificate is not a requirement to dissolve an LLC in the state of Vermont. However, like in our case, you must ensure that all federal, state, and local taxes are settled to avoid fines or penalties.
Some of the common taxes that an LLC may owe are:
- Sales & Use Tax
- Employee Withholding Tax
- Unemployment Insurance Tax
- State Income Tax
- Local Tax
Before obtaining a clearance certificate you must complete a final tax return with the Internal Revenue Service (IRS). Other taxes to consider include:
- Federal Taxes
- Personal Income Taxes
- Franchise Taxes
Step 4: File Articles or Certificate of Dissolution
After completing the prerequisites, you must file the Vermont Articles of Termination with the Vermont Secretary of State online [2].
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, whichever is most convenient for you.
Step 5: Distribute Assets
Before distributing assets, the LLC must pay off all its liabilities. This includes debts to creditors, outstanding bills, and any legal or professional fees incurred during the dissolution process.
In the case of our LLC, the assets that were not in cash form (like property, equipment, or inventory), were liquidated (sold for cash).
The proceeds from these sales were then added to the LLC's cash pool for distribution.
Distribute the remaining assets according to the provisions in the operating agreement.
Step 6: Close All Accounts and Cancel Licenses and Permits
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.
During our dissolution, finalizing this step safeguarded both our reputation as a business entity and our finances.
FAQs
How Much Does It Cost To Dissolve an LLC in Vermont?
It costs $20 to dissolve an LLC in Vermont. The filling is paid for the Articles of Dissolution due to the Vermont Secretary of State.
How Long Does It Take To Dissolve an LLC in Vermont?
It takes 3-5 business days for the Vermont SOS to process the Articles of Termination. However, the overall timeframe to dissolve a Vermont LLC will depend on the workload in the Vermont SOS office or the initial steps you need to accomplish, which include board meetings, closing accounts, and distributing assets.
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.
Reference
- https://advocacy.sba.gov/wp-content/uploads/2023/11/2023-Small-Business-Economic-Profile-VT.pdf
- https://sos.vermont.gov/corporations/renewals-updates/end-business-registration/
