An LLC stands for a limited liability corporation and can be an easy way to set up your new business. However, there may come a time when you need to dissolve an LLC in Utah. There are a few steps that you will need to follow in order to dissolve the LLC and avoid financial and operational challenges. Since this legally signifies the formal termination of its operations, you will need to file with your state and go through the proper channels before setting up a different business structure. In this blog, we will discuss the steps needed to dissolve an LLC and how our legal experts can help along the way.
Types of LLC Dissolution
There are several types of LLC dissolution that may all be triggered by a different entity. The status of your recognized business may change the steps you need to follow to ensure that you have no remaining obligations. Below are the different types of dissolutions and how they vary.
Administrative
An administrative dissolution will be initiated by the state and is involuntary because the business failed to meet ongoing LLC requirements. Not filing annual reports, missing payments, or failure to maintain a registered agent are the common reasons that you experience administrative dissolution. When the state pursues an administrative dissolution, the registered agent will be notified and has around 60 days to correct the errors. If the errors are not corrected, the state will dissolve the LLC.
Judicial
Another type of LLC dissolution is when a court orders the dissolution. This can be caused by lawsuits from family members, disagreements among members of the business, or unethical activities committed by the business. If a judge grants this, the local court system handles the steps of closing the LLC, rather than the owners of the business.
Voluntary
The most common option is when the owners or operators decide to move on to a new system or adventure and voluntarily dissolve the LLC. LLC members will need to vote to close the LLC and adhere to operating agreements and state law. Each state will have different laws governing how to go about a dissolution, which we will now look at below.
Vote To Dissolve
The voluntary dissolution starts with the members of the LLC voting on the dissolution. If you are the sole member, you can determine to dissolve an LLC on your own. Once the vote passes, you can move on to filing the dissolution with the Utah State Department of Commerce with the intention to dissolve. You will then need to file a form with the Division of Corporations & Commercial Code. Before any paperwork is filed, the vote must be agreed upon, or the business may not be dissolved.
Finalize Business Affairs
In addition to the state notification, many other parties should be notified when you plan to dissolve your LLC. Some of the most important people to notify are employees, contractors, customers, and your bank. Employees of your business should be notified first so they can take care of final payroll, insurance information, and recieve W-2 statements.
Notifying the supplier that helps your business function should be notified that you plan to dissolve an LLC, so they can cancel future orders and deliveries. If there are purchase orders or other contracts in place, you may need to sort through the requirements so that the supplier gets what they are rightfully owed.
Notify Creditors
Creditors are some of the next people you should notify, especially if you have outstanding debts. Written notice is best for business creditors so they can submit a claim to collect your outstanding amount. Settling your debts may be a long process that requires you to jump through multiple hoops. Commercial mortgages, auto leases, or business loans are some of the most important debts for businesses to handle before dissolution.
Notify Tax Agencies And Settle Remaining Taxes/Debts
Similar to creditors and commercial debts, any outstanding tax obligations will also need to be resolved. Federal and state taxes may need to be filed before you can dissolve an LLC. Businesses in Utah won’t need a Tax Clearance, but a foreign LLC will need one, even if the registered agent is located in Utah. Business owners will need to pay/remit payroll taxes, property taxes, collected sales tax, or other tax obligations.
File A Statement Of Dissolution
In order for your LLC to be officially ended, you must file a Statement of Dissolution with the Utah State Department of Commerce. This simple form requires you to provide the LLC’s name, entity number, effective dissolution date, and an authorized signature. You can submit the form through mail or in person, but there is a fee to file the certificate in Utah specifically.
Business Help From Our Legal Experts
WW Partners offers comprehensive legal help for businesses across the state. Having legal help and advice can ensure that the formation or dissolution of your business is handled correctly. If you want your business to last or you are looking to set up a different business structure, our lawyers can help. The right legal team will help your business remain in good standing, avoid fines, and protect your employees. Understanding the complexities of business law can be overwhelming for small business owners. Connect with our lawyers to get your business on the right path today!