How to Close an LLC in the U.S. in 2023
The process of liquidation of LLC in the USA is almost the same throughout the country. However, there are slight differences depending on the registration state. It is important to take into account all the legal requirements.
For example, if you need to close a foreign LLC in the USA in 2023, registered in different states, the documents for liquidation must be filed in each of these states. Otherwise, the LLC will be considered active with all the ensuing consequences.
Grounds for closing an LLC
It is possible to close an LLC in the U.S. on the following grounds:
- Closing the LLC at one's own will.
- Administrative liquidation - closing due to bankruptcy, failure to pay taxes, failure to submit mandatory annual reports, etc.
- By court order - e.g, due to disagreements between the company's members, their misconduct, the presence of a judicial lien that leads to the business to bankruptcy.
How to close an LLC
The LLC liquidation process should be described in the operating agreement, which should have been made before its registration. If it was done, you must follow the document. If not, the requirements of the state where the company was incorporated must be followed.
Step 1: Vote to close the LLC
The first thing to do is to get all board members together and vote to terminate the business. Pay attention to the rules of the state where the company was incorporated. In some regions, 51% of the vote is enough to dissolve, while in other states, it is 75%, or unanimous consent can be required. To avoid problems as early as the first step, carefully draft the operating agreement when creating the LLC.
Step 2: Notify interested parties of LLC liquidation
The next step is the notification of the closing of the business. First, you need to notify:
- the taxing authorities;
- the regulator that issued the license;
- customers etc.
Notifying tax and other government agencies as early as possible is best. It will allow you to determine how much your company owes and to whom, which will help to prepare the final tax forms correctly.
Creditors can file claims for any liabilities until after the assets of the LLC are liquidated. Depending on the state, they have 90 to 180 days to file a claim, and then it will be dismissed. It's important to know that it's best to notify creditors, even if state law doesn't require it. This way, you can be sure that you won't have any unforeseen debts in the future.
Step 3: Filing final tax forms
Before liquidating your LLC, you must ensure no federal or state debts are left. Then close your company's tax account with the IRS. Fill out your tax return and ensure all sales taxes and withholdings are correct. If the company had employees, close the EIN (Employer Identification Number), then file the final employment tax return.
Also, remember to file the state's final tax return, paying all fees. If the company has a state taxpayer TIN, you can also close it. When you're done, get a certificate from the IRS that there are no debts to the state.
It's necessary to notify the state authorities where the business was registered about the dissolution of the LLC by filing the appropriate documents with a statement on the prescribed form. Some states may only accept the documents once you get permission from the local tax office.
Step 4: Filing for dissolution
The authorities of the state where the business was registered must be sure to notify the dissolution of the LLC by filing the appropriate documents with a statement on the prescribed form. Some states may refuse to accept the documents if there is no permission from the local tax office.
Step 5: Distribution of assets
After paying taxes and settling all issues with creditors you can distribute the LLC's assets among the members. This procedure is usually spelled out in the operating agreement. If it's not, you must the state of incorporation laws.
Step 6: Make sure to follow all procedures for closing the LLC
Additional tasks might need to be completed when liquidating an LLC. These may include:
- Closing the corporate bank account.
- Canceling licenses and permits that were required to run the business.
- Informing employees of the mandatory benefits they are owed when the LLC is dissolved.
How long does it take to close an LLC\
If all documents are filed, and there are no problems, it takes up to 2 weeks to close the LLC. If there are issues with the tax office or liabilities to creditors, the LLC closure process can stretch out.
How to close LLC in the USA quickly and without problems
Contact IT-OFFSHORE to close an LLC in the USA in 2023.