Dissolving your LLC may be more complex than creating it; an experienced business attorney can help you address all of the steps necessary to conclude your business and minimize your risks of future liabilities arising. It is important to note at the outset that not all LLCs are dissolved in the same manner. While many follow the process set out below, an LLC may also be involuntarily dissolved through by court order. The process may also vary if your LLC has not conducted any business or is a not a domestic LLC. However, the typical procedure for LLCs formed in California begins with a close review of the initial formation documents and any amendments or modifications to those documents.

The Operating Agreement and Articles of Organization

When you formed your LLC, your business attorney may have drawn up articles of organization and an operating agreement. One or both of these documents may include provisions governing the members’ rights and responsibilities when dissolving the company. It is common for the operating agreement to require the members to hold a vote on a resolution to dissolve the organization. If your LLC’s controlling documents set out specific procedural requirements before dissolving the company, it is important to adhere to those requirements in order to avoid the potential for a lawsuit.

In the event your LLC’s operating agreement or articles of organization do not provide guidance on how to dissolve the business, the California Corporations Code requires that a majority of members vote in favor of dissolution before the LLC may be properly dissolved.

Winding Up Your LLC

Dissolving an LLC’s legal status does not, by itself, nullify outstanding liabilities. California law requires owners to discharge an LLC’s obligations by mailing a notice of the commencement of dissolution to any creditors or claimants. This notice is best drafted by your business attorney, as the language requirements can be rather technical. Winding up your LLC also includes paying all of the company’s known debts and liabilities as well as any outstanding taxes. Only then can the assets be distributed to members according to their ownership interest in the company.

Certificate of Dissolution and Certificate of Cancellation

After the vote to dissolve the LLC has occurred and the business has been wound up, including any appropriate notices to creditors, it is necessary to file a Certificate of Dissolution and Certificate of Cancellation with the California Secretary of State’s Office or the short-form version of the Certificate of Cancellation if your business qualifies. These Certificates should include the exact name of the LLC when the articles of organization were originally filed, as well as the SOS file number. You can download the required forms from the Secretary of State’s website or obtain them from your small business attorney. If your LLC is registered in other states, separate forms must be filed in those states as well.

Gehres Law Business Attorneys Can Help

The process can be more complicated for companies which have been in business for some time or have members who do not agree on the methods for dissolution or even disagree with the dissolution itself. The business attorneys at Gehres Law can help. Don’t leave your company and its members at risk through an improper dissolution process. Contact us today for a free consultation to learn more about dissolving your LLC.