If you are the owner of an LLC in Wisconsin, there may come a time when you decide to dissolve the company.
This can be a complicated process, but it is important to understand the steps involved and the reasons for dissolving a Wisconsin limited liability company.
Steps to Dissolving a Wisconsin LLC
Every business entity in Wisconsin has to go through a formal dissolution process. Wisconsin LLCs are no exception. The steps to dissolve an LLC in Wisconsin are as follows.
Step 1: Follow Your LLC Operating Agreement
The procedure required to dissolve a Wisconsin LLC should be outlined in the operating agreement.
The LLC will be dissolved consistently with this original document in most cases.
This means that the Wisconsin LLC will be wound up, and all assets and liabilities will be disposed of according to the operating agreement.
If you do not have an operating agreement or ambiguities in the document prevent you from dissolving your LLC, then state law will be used as a default.
In most cases, LLC members will vote to dissolve the Wisconsin LLC. A majority vote is usually required to pass this resolution. Written consent from all LLC members should be kept in the records.
For this reason, it is important to make sure that your LLC has an up-to-date operating agreement.
Step 2: Notify All Interested Parties
Unknown claimants and creditors may have a claim against the Wisconsin LLC. The LLC must notify these people of its intent to dissolve by:
- Publishing a written notice in the newspaper indicating that it intends to shut down operations.
- Sending a written notice to all known creditors and claimants.
The notice must be published in a newspaper at least once per week for four (consecutive) weeks. The newspaper should be circulated where your business is located or where you do most of your business transactions, such as the county courthouse.
You might want to publish the notice on a website too and send a written notice to a local newspaper. Make sure to include your business name, the effective date when the LLC will cease its operations, and the name and contact information for the individual who will be receiving claims.
You can appoint a dissolution manager who can be someone other than a member or manager of the LLC. This person will be responsible for handling the closure of the business. The dissolution manager should notify all interested parties, receive and process claims, and distribute assets to LLC members or former members.
Step 3: Close Business Accounts
Business bank accounts must be closed, and all outstanding taxes and debts must be paid. The LLC should work with its creditors to come to a resolution, if possible.
If you have a tax account with various financial institutions, you must close them. This includes the IRS account, state account, and local tax account.
Wisconsin Department of Taxation doesn't require LLCs to obtain tax clearance before they can dissolve. However, the failure to file the final tax return can result in penalties and interest.
Make sure you have a representative to help you finalize the closure of your business accounts. This includes closing credit card accounts, utility accounts, and other services that were connected to your LLC.
Step 4: Settle Debts and Distribute Assets
If your Wisconsin LLC has any debts remaining, they will need to be paid off before the dissolution process can be finalized.
After all the debts are settled, the remaining assets of the LLC after dissolution will need to be distributed among the members according to their ownership percentage.
The assets can be distributed in a few different ways:
- Cash can be paid out to each member
- The remaining assets can be transferred to the members' personal accounts
- The remaining assets can be used to create new LLCs or businesses.
Step 5: File LLC Articles of Dissolution
The dissolution of a Wiscons LLC isn't complete until the company files Articles of Dissolution with the Wisconsin Department of Financial Institutions. This document contains information about the LLC's final day of operation, as well as the LLC name and registered agent.
There is a $20 fee to file Articles of Dissolution, which can be paid by check or money order payable to the Wisconsin Department of Financial Institutions. The completed form, along with the required fee, can be submitted by mail to: Department of Financial Institutions Division of Corporate and Consumer Services, P.O. Box 93348 Milwaukee WI 53293-0348.
The Articles can have whatever form you like. Just make sure you include the business name, filing date, state of organization, registered agent, the effective date of the dissolution, and mailing address.
Department of Financial Institutions, Division of Corporate and Consumer Services recommends that companies send the dissolution form via certified mail, so they have proof that it was received. You should submit the original document and one exact copy of the Articles of Dissolution.
Reasons to Dissolve a Wisconsin LLC
LLC owners decide to dissolve their business for a variety of reasons. This is called voluntary dissolution. However, some businesses frequently lose their good standing with the state, leading to the LLC's administrative dissolution.
Voluntary dissolution of Wisconsin LLCs
The following are common reasons to dissolve an LLC in Wisconsin voluntarily:
- The business is no longer profitable or desirable
- An owner wants to retire, and no one else can take over
- One or more of the owners passes away
- The company has reached its goals and dissolved as planned from the beginning
- There is a dispute among the owners that cannot be resolved.
Whatever the reasons, the procedure for dissolving an LLC in Wisconsin is relatively simple. After all the other steps, the owner or owners must file a document called Articles of Dissolution with the Wisconsin Department of Financial Institutions as the final step of the process. Without this document, the LLC remains in existence, and the taxes and liabilities of the company continue.
This can be a serious matter, as all LLCs remain financially responsible for any future debts or lawsuits. This can drain the assets of an otherwise defunct business and cause financial ruin to the former LLC members.
Involuntary Dissolution of Wisconsin Llcs
When an LLC in Wisconsin is administratively dissolved, it means the LLC hasn't met statutory requirements, such as filing annual reports or paying business tax and annual report fees.
If the delinquent status isn't addressed in time, your LLC will be administratively dissolved by the state and its articles of organization terminated on file with the government.
All delinquent annual report fees, annual reports, or any other additional fee that hasn't been paid has to be paid in full before the LLC can officially begin the formal process of dissolution.
Other reasons why an LLC can get dissolved by the states are if the company is convicted of a felony, ceases to do business in Wisconsin on a judicial basis, or if the LLC hasn't maintained a registered agent or registered office in the state.
If an LLC is convicted of a felony, it will be administratively dissolved by the Wisconsin Department of Financial Institutions for at least five years, after which the LLC can apply to reinstate its articles and resume business operations.
Do I Need Tax Clearance to Dissolve a Wisconsin LLC?
No. The Wisconsin Department of Revenue doesn't require limited liability companies to get tax clearance before dissolving. However, you must file your final state tax return and pay all the taxes due before terminating a Wisconsin LLC (or any other business entity).
You should also notify the Department for general informational purposes that you want to dissolve the company by requesting to close an account on their website.
Can I Dissolve a Foreign LLC in Wisconsin?
Yes, but foreign corporations and LLCs have to file for the withdrawal, unlike a domestic Wisconsin LLC. After you submit the withdrawal application (Form 524 for foreign LLCs), you must obtain the Certificate of Withdrawal from the Department of Financial Institutions.
A $40 filing fee is also due at this time. You can use their express mail address (345 W. Washington Avenue 3rd Floor) or the regular mailing address (P.O. Box 7846, Madison WI 53707).
How Long Does It Take To Dissolve a Wisconsin LLC?
The dissolution process for a Wisconsin LLC can take up to one week, but you can reduce the waiting time by opting for expedited processing. If you pay the additional filing fee of $25, you can shorten the processing period to only one business day.
How Much Does It Cost to Dissolve a Wisconsin LLC?
The fee to dissolve an LLC in Wisconsin is $20. You must pay the fee to the Department of Financial Institutions (DFI).
If you are dissolving a foreign LLC that was formed in another state, you will also need to file a certificate of withdrawal. There is an additional fee for this service.
Can You Reopen a Dissolved LLC in Wisconsin?
Yes, you can reopen a dissolved LLC in Wisconsin. You need to file an Application for Reinstatement with the state. You must also pay all taxes and other penalties that are due by the time of filing if you missed any.
This includes taxes, a missed annual report, and other fees. The state will review your application and, if it is approved, will reinstate your LLC. You will need to file new articles of organization with the state and re-register with all appropriate agencies.
How Do I Close My Wisconsin Withholding Account?
Closing the withholding account is done through the Department of Revenue website. Go to the website and click on "My Tax Accounts." Select "Withholding Accounts." You will see a list of all the withholding accounts for businesses.
Find the account you want to close and click on the link. The form you need to fill out is called "the Request to Close Account." You can also contact the Department of Revenue via phone at (608) 266–2776 to email them at [email protected]
Dissolution of an LLC in Wisconsin: Conclusion
Dissolving an LLC in Wisconsin might seem complicated, but it doesn't have to be. If you are not sure how to dissolve an LLC in Wisconsin or if you struggle with obtaining legal information about the dissolution process, don't hesitate to seek professional help from a law firm and tax expert.
They can provide valuable insight into what needs to happen next after dissolving an LLC, including filing for taxes, as well as setting up protections against creditors who want to take money owed on account of debts incurred by the dissolved company.