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, although there are slight differences, depending on the state of registration. 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, which was registered in different states, the documents for liquidation must be filed in each of them. Otherwise, the LLC in the ignored region 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 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 members of the company, their misconduct, the presence of a judicial lien that leads the business to bankruptcy.
How to close an LLC
The process of LLC liquidation should be described still in the operating agreement, which was made before its registration. If this was done, you have to follow the clauses painted in 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, in others it is 75%, and in others unanimous consent is required. To avoid encountering 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 notification of the closing of the business. First of all, you need to notify:
- the taxing authorities;
- the regulator that issued the license;
- clients, etc.
It is best to notify tax and other government agencies as early as possible. This will allow you to determine how much your company owes and to whom, which will help to properly prepare the final tax forms.
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, then it will be dismissed. Important: 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 your history in the future.
Step 3: Filing final tax forms
Before you liquidate your LLC, you have to make sure there are no federal or state debts left. Then close your company's tax account with the IRC. Fill out your tax return and make sure that 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, don't forget to file the state's final tax return, paying all fees. If there was 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.
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, settling all issues with creditors, you can distribute the LLC's assets among the members. How to do this is usually spelled out in the operating agreement. If not, you have to follow the laws of the state of incorporation.
Step 6: Make sure to follow all procedures for closing the LLC
Often when liquidating an LLC, there may be additional tasks that need to be completed. These include:
- Closing the corporate bank account;
- Canceling licenses and permits that were needed 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 questions from the tax office, the need to settle liabilities to creditors, the process can stretch out.
How to close LLC in USA quickly and without problems
Contact IT-OFFSHORE to close an LLC in the USA in 2023.