A Limited Liability Company (LLC) is one of the most common business structures used in Florida. Most entrepreneurs know how to open an LLC, which is not a complex process. However, when it comes to dissolving an LLC, things may get shady and confuse.Regardless of the reason behind the decision to dissolving, it is utterly important to follow all the required procedures provided by Florida law. Failing to dissolve a state-registered entity correctly may lead to unforeseen issues and unnecessary headaches in the future.
In this article, we will provide you a full guide on how to dissolve an LLC in Florida properly.
Which Situations Allow Someone to Dissolve an LLC?
The answer to this question is written on the operating agreement for your LLC. This document dictates the circumstances in which you can dissolve the company, sometimes requiring a voting process among members.
However, in case there is no operating agreement, you will need to take another type of action. Florida law permits the dissolution of an LLC in case:
- There is unanimous written consent of all members.
- No member exists for the LLC for 90 days or more.
- An entry of judicial dissolution.
- There is a statement of administrative dissolution filed by the Department of State.
Typically, the first case happens more often. We recommend you preserve a record of all documents attached to the LLC in its official files.
Dissolving an LLC in Florida- Step-by-Step
To facilitate the process, we compiled a step-by-step list containing each necessary procedure involved in the dissolution of an LLC.
Normally, dissolving an LLC with a solid operating agreement is easier, as this document may provide all rules required on the procedure of dissolution in detail. In case there is no operating agreement, the process of dissolution will be governed by the Florida Revised Limited Liability Company Act. In both cases, the steps share some similarities:
1) Reviewing the Agreement
First, it is fundamental to determine whether procedures are specified in the LLC’s operating agreement regarding the matter of dissolution. Knowing these requirements will be essential when the meeting of the members of the LLC takes place to vote on the dissolution.
We recommend you seek guidance with an expert attorney, as it will certainly facilitate the reviewing process.
2) Providing Notice
When dissolving an LLC in Florida, you will need to provide notice to all creditors, claimants, and employees of the company.
Providing notice allows creditors to file any lawsuits against the LLC. Although this procedure is not mandatory in Florida, it will help to ensure an easier dissolution process. Also, it is essential to settle down all creditors’ claims before the distribution of remaining assets between members.
Besides, there is the possibility of unknown claimants. Publishing the articles of dissolution will help to ensure that these unforeseen claimants know that the LLC is ceasing its activities.
3) Reviewing the LLC’s Finances
The whole financial aspect of the LLC must be reviewed in detail before the distribution of the remaining assets takes place. In this phase, it is important to pay any outstanding debts and obligations attached to the LLC, which includes all creditors.
Also, it is highly recommendable to reserve some LLC funds to cover unexpected expenses in the future, as there may be bills and other liabilities that are presently unknown to the LLC.
Overlooking this phase may be dangerous, as members may be held accountable to the LLC’s creditors in case the distribution of funds takes place before the settlement of all existing debts.
4) Be Careful with Taxes
Before the final dissolution takes place, it is necessary to close all LLC’s tax accounts, which includes paying tax obligations on the state and federal level. It is essential to be careful regarding payroll liabilities and sales taxes in case the LLC has any employees.
Also, a final tax return must be completed and filed both on the federal and state level before dissolving your LLC in Florida. The LLC members must be prepared in case there is a necessity to show any earns and losses on their tax returns.
After ensuring all these procedures were done right, you can contact the IRS and close your Employer Identification Number (EIN).
5) Ceasing Activities
In the case an LLC in Florida has other branches in any other state, Florida law provides that all must cease their activities upon the dissolution of the LLC. Also, in case there are any remaining taxes in other states in which the LLC was operating, you will need to settle them down before dissolving the company altogether.
Being guided by an expert attorney may help, as each state requires distinct filing and fees to cease business operations.
6) Disposing of the Remaining Assets
Lastly, you will need to distribute the remaining assets between the LLC members. Given that all creditors’ claims, and tax obligations should be paid and closed at this moment, it is time to share the company’s assets fairly.
The distribution must be according to the terms contained in the operating agreement.
7) Filing the Paperwork
In Florida, state laws require a filing of the Articles of Dissolution with the Florida Secretary of State. Once the filing was concluded successfully, you will receive a certificate of dissolution.
This certificate is the document that officializes the dissolution of an LLC in Florida. The name of the dissolved LLC will be available for use by third-parties 120 days after the dissolution is complete.
How to Dissolve an LLC in Florida? – Seek Professional Guidance
As it is plain to see, dissolving an LLC in Florida may not be as easy as many entrepreneurs think. Hence, being assisted by a seasoned business attorney will facilitate the whole process for you.