How to Legally Terminate a Limited Liability Company
When the members of a limited liability company (LLC) decide to close their business, there are formal steps to take in order to legally terminate the company. Just as you legally formed your company via your Secretary of State, so too must you terminate the LLC.
Things You'll Need
- Computer with Internet access
- Your company's operating agreement
- All members of the LLC
The members of the LLC should vote to terminate the business.
Refer to your operating agreement for the steps that you must take to terminate.
Search your Secretary of State's Web site and download the form to legally terminate the LLC. This is known as the "Articles of Termination."
Rectify any debts or outstanding business. You must sign your name to a document that declares the LLC will have no outstanding bills or business at the time of termination.
Fill out the termination papers for your limited liability company and have the members sign them. The process to legally terminate the LLC should not take more than a day.
Submit the articles of termination to your Secretary of State's office.
Tips & Warnings
- Though the process to legally terminate a limited liability company is simple, closing a business internally can be more complex. This is why an operating agreement is highly recommended for every LLC. This document is drawn up at the LLC's formation and contains an "exit strategy" that outlines the procedure for closing the business. This document will help members avoid unnecessary disputes.
- The limited liability status of a company does not protect it from fundamental business principles and issues such as viability. Personal liability for company debts is avoided with this business structure, but you must follow a sound business plan to grow and maintain healthy operating capital. For advice on business plans, consult the Small Business Administration (see Resources below).