How To Dissolve an LLC in Washington State? (Full Guide)
When business owners want to move on to other opportunities, dissolving an LLC in Washington may be the best option.
As a business consultant who specializes in legal advice regarding LLCs, partnerships, and corporations, I will provide a comprehensive guide on dissolving a Washington LLC based on research, legal information, and personal experience.
The article will highlight some of the reasons why business owners may choose to dissolve a Washington limited liability company.
Quick Summary
- To dissolve an LLC in Washington state, you must submit the Certification of Dissolution with the Washington Secretary of State.
- All Washington businesses must clear any outstanding state and federal taxes before it is terminated.
- Despite Washington's lower business failure rate of 16.7% compared to the national average, it's essential for LLC owners to familiarize themselves with the dissolution steps to efficiently manage potential downturns.
- From my venture, adhering to these guidelines not only simplifies the dissolution process but also provides peace of mind knowing all legal and tax obligations are met.
6 Steps to Dissolving an LLC in Washington
The steps to dissolving a domestic Washington LLC begin at a company level. That means that LLC members have to go through an internal process before moving to the state level and filing the legal papers with the state.
Step 1: Vote to Dissolve the LLC
Review the LLC's operating agreement for any specific provisions or requirements for dissolution.
Convene a meeting of the LLC members and they must agree to dissolve the LLC.
The Washington State law typically requires the approval of at least a majority of the members, but this can vary based on the LLC's operating agreement. Document the decision in the meeting minutes or a written consent form.
We recommend ensuring that the decision to dissolve complies with Washington State law and the terms of the operating agreement.
Step 2: Notify Creditors About Your LLC's Dissolution
During our dissolution, we compiled a list of all creditors and claimants and notified each creditor in writing of the LLC's dissolution.
The notice should include a claim submission deadline (which cannot be fewer than 120 days from the date of the notice) and the mailing address where claims should be sent.
We also recommend establishing a process for addressing and resolving creditor claims.
Step 3: File Final Tax Returns and Obtain Tax Clearance
Ensuring compliance with tax obligations during the dissolution process is crucial for maintaining the integrity of the state's economic structure, especially considering the vast number of small businesses in Washington.
According to the 2023 US Small Business Administration statistics, there are 644,868 small businesses in the state, accounting for 99.5 percent of all businesses [1]. This highlights the importance of adhering to tax regulations to support the economic framework.
The process begins with filing the final federal and state tax returns, clearly indicating that these are the final submissions for the business. This step is essential for formally closing the business's tax accounts and preventing future liabilities.
After clearing our taxes, obtain a tax clearance certificate from the Washington State Department of Revenue, confirming that all tax liabilities have been satisfied.
To obtain a tax clearance certificate for your Washington business, submit a Revenue Clearance Certificate Application, settle business taxes and fees, and fulfill all fiscal obligations [2].
"You need to file all missing reports and pay any past due amounts before filing the Revenue Clearance Certificate Application form, or else it won't be approved."
-Jon Morgan, Co-Editor & Co-Founder of Venture Smarter
If your company has outstanding taxes, you can work out a payment plan to pay taxes with the Washington Department of Revenue.
The information you will have to provide in your Revenue Clearance Certificate Application contains the following:
- Business name (LLC name)
- Federal tax ID number and Unified Business Identifier (UBI number)
- Mailing address
- Contact information
You can find the Revenue Clearance Certificate Application form on the Washington Department of Revenue website. The only way you can send it is by mail.
Step 4: File Articles or Certificate of Dissolution
The next step in the LLC dissolution process is to file a Certificate of Dissolution with the Washington Secretary of State.
Washington Secretary of State Corporation Division offers a fillable PDF Certificate of Dissolution form on its website.
Once downloaded from the website, the completed certificate can be filled out by hand, mail, or in person. In this form, you need to provide:
- LLC name and ID number
- Date of dissolution (which is the effective date)
- Signature of LLC representative
- Name and address of the registered agent
Washington Secretary of State will charge a $20 filing fee if you file online. We completed our filing via mail and paid $0 as there are no charges for mail submissions.
Once the form is filled and submitted, you should receive a confirmation by email of your Washington LLC dissolution in approximately five (business) days.
Step 5: Distribute Assets
Liquidate the LLC's assets, convert them into cash, and pay off all creditors and claimants.
After all (or most) claims have been satisfied, any remaining funds can then be distributed among members or allocated toward another purpose stipulated in the Articles of Organization.
If the remaining assets were used to pay debts, the company must submit a statement certifying that it has no remaining assets at its disposal.
Follow the LLC's operating agreement or Washington State law for asset distribution.
Ensure all creditor claims are satisfied before distributing assets to members.
Step 6: Close All Accounts and Cancel Licenses and Permits
The final step is to close all business bank accounts and credit lines. Cancel any business licenses, permits, or registrations held by the LLC.
When completing this step ensure all final bills and obligations are paid.
We also advise keeping records of closures and cancellations for future reference.
FAQs
How Much Does It Cost to Dissolve an LLC in Washington State?
It costs $0 to dissolve an LLC in Washington state since there is no filing fee when submitting the Certificate of Dissolution in person. However, online submission costs $20, and an additional $50 for expedited processing.
How Long Does It Take To Dissolve an LLC in Washington?
It takes about a month to dissolve an LLC in Washington. Expedited service reduces the time to one week.
Can You Sue a Dissolved LLC in Washington State?
Yes, you can sue a dissolved LLC in Washington state within a three-year frame after the dissolution becomes effective.
References:
- https://advocacy.sba.gov/wp-content/uploads/2023/11/2023-Small-Business-Economic-Profile-WA.pdf
- https://dor.wa.gov/manage-business/my-account/revenue-clearance-certificate
