There are different reasons why an LLC, or limited liability company, would close. Sometimes members may wish to retire and have no desire to continue the LLC. Perhaps market growth has slowed significantly, and it is unprofitable to continue operating the LLC.
Whatever the reason, correctly dissolving a state-registered entity like an LLC requires multiple steps. Failing to close an LLC properly may lead to unnecessary administrative costs and increased liability. Avoid confusion and a potential lawsuit by learning how to close an LLC in Florida.
The legal obligations of an LLC can continue for years after an LLC is dissolved, and in some cases the LLC’s members can wind up being responsible for those obligations. LLC members should take a thorough approach to dissolving and liquidating the LLC, to avoid costly surprises in the future.Business Attorney Trevor Brewer
When Can You Dissolve an LLC?
Typically, the operating agreement for your LLC dicatest the circumstances where you can dissolve the LLC. In many cases, the operating agreement will require a vote among members in favor of dissolution.
If no operating agreement exists, Florida law allows you to dissolve an LLC by unanimous written consent of all members. Additionally, Florida law permits dissolution when the following occurs:
- No member exists for the LLC for a period of 90 days or more;
- An entry of judicial dissolution; or
- The Department of State files a statement of administrative dissolution.
You should preserve a record of all documents in the LLC official files.
Steps to Close Down an LLC
Officially dissolving an LLC requires you to complete critical tasks. Your LLC operating agreement should provide detailed rules on the procedure of dissolution. If you do not have an operating agreement, the dissolution procedure will be governed by the Florida Revised Limited Liability Company Act. Typically, you should expect to complete the following steps.
First, you should schedule a meeting of the members of the LLC to vote on dissolution. Different LLCs have different requirements for dissolution. Some LLC operating agreements require a unanimous vote. Other LLC operating agreements require a majority vote in favor of dissolution.
When reviewing your operating agreement, it’s essential to determine whether specific procedures exist regarding dissolution. The operating agreement may require advance notice of the meeting and a particular time for members to vote. Be sure to record the vote in the official minutes of the dissolution meeting.
Provide notice to all creditors and claimants of the LLC. Additionally, provide notice to any employees of the LLC.
Notice provides creditors the opportunity to file any lawsuits against the LLC. Although not required in Florida, it does encourage a smoother dissolution process. Settling all creditors’ claims first allows for worry-free distribution of remaining assets to members.
In Florida, written notice to creditors must include the following information:
- Description of the claim that claimant may assert;
- Whether the LLC admits that it owes the debt;
- Mailing address;
- Deadline for confirmation of the claim; and
- A statement that distributions from LLC will be made to members after the passing of the period without notice.
There may be claimants unknown to the LLC. Filing or publishing your articles of dissolution ensures that these unknown claimants receive notice that the LLC is closing down.
Engage the services of a qualified business attorney to consult on how to provide proper notice to creditors for existing and future claims. The process can be complicated. You will want to take steps to ensure that you don’t miss any creditors and that you limit the liability of your members after completion of distributions.
Before distributing remaining LLC assets to members, review the LLC’s finances. Be sure to pay all outstanding debts and obligations of the LLC. Additionally, there may be bills and expenses in the future that are presently unknown to the LLC. Therefore, it’s important to reserve some LLC funds to cover these unforeseen expenses.
The LLC must pay creditors before it can make distributions to members. If you distribute funds before paying creditors, members may be held personally liable to the LLC’s creditors.
When you dissolve an LLC, you need to close all its tax accounts, including paying all tax obligations on the state and federal level. Additionally, if your LLC has employees, it’s essential that all payroll withholding and sales taxes are correct.
Filing a final tax return on the federal and state level must be completed before dissolving a Florida LLC. LLC members must also be prepared to show any gains and losses on their tax returns. Since LLCs operate as pass-through entities, members are personally responsible for paying these taxes.
Once all these steps are complete, contact the IRS to close your EIN (employer identification number).
Wrap Up Business
Florida law provides that upon dissolution of an LLC in Florida, the LLC must cease operations in any other states where it conducted business. You also need to be sure to pay any remaining taxes in all those states. Each state requires different filing and fees to cease operations properly.
The experienced team of business attorneys at BrewerLong is prepared to assist clients through this process.
Dispose of Assets
The final step in a Florida LLC dissolution is distribution. Once all creditor claims and tax obligations have been paid and closed, you can distribute any remaining assets. Distributions to LLC members should be made according to the terms of the operating agreement. Distribution will generally reflect each member’s interest in the LLC.
Florida law requires a filing of the articles of dissolution with the Florida Secretary of State. These articles provide the following information:
- The name of the LLC;
- The date of dissolution;
- Whether dissolution was agreed upon by vote or written consent of members;
- A statement that the LLC’s obligations, debts, and liabilities have been settled and paid;
- A statement that distribution of the LLC’s remaining assets to the remaining members of the LLC is complete; and
- A statement that the LLC has no legal action pending against it.
In Florida, articles of dissolution cost $25. Once the filing process is complete, you will receive a certificate of dissolution. This certificate makes the dissolution of the LLC official. Your LLC name will be available for use by anyone else 120 days after dissolution is complete. A business law attorney can assist in preparing and filing the articles of dissolution.
Why Do I Need An Attorney
The process of how to close an LLC in Florida is complicated. You need to complete multiple steps before entering a proper Florida LLC dissolution. Failing to resolve any liabilities or make proper distributions can lead to lawsuits down the road.
The team at BrewerLong possess intricate knowledge of business matters and can handle your Florida LLC dissolution smoothly. With over a decade of experience providing the highest caliber legal service to clients, BrewerLong attorneys are eager to assist you in dissolving your Florida LLC. Contact our office today!
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