There comes a time when business owners decide to terminate an LLC. When that happens, it is important to know what you should do to prevent any issues. You have to understand how to dissolve an LLC properly following the process and requirements of the state where you formed it.
Closing A Business
There are many reasons why LLC members decide to cease all business activities in a state. Here are some of the most common:
- The LLC is no longer profitable.
- The business entity has fulfilled its intended purpose.
- One member has become incompetent, enters bankruptcy, or dies.
- Members have a disagreement on an important decision.
Why It Is Necessary
If you are doing business in Iowa, you are required to register with the Secretary of State by submitting your Articles of Organization. Once the state approves your formal paperwork, you can start legally operating in Iowa. It also comes with responsibilities. You will have ongoing reporting and tax obligations to ensure compliance. Failure to do so may result in penalties.
Because of that, you must inform the Secretary of State if you want to cease your LLC’s business activities. The state has to make sure that your LLC has fulfilled all of its obligations before approving its closure.
If your LLC does not go through dissolution, it will continue to have obligations with the state. It will be considered a delinquent business for not submitting the required reports and not paying the corresponding fees.
What You Should Do Before Filing
There are multiple steps you need to complete for the dissolution. Before you file the appropriate form, all members have to take some actions. Owners have to approve the dissolution. To do this, you can check your company’s operating agreement. See if there is a provision regarding the closure of your business.
If there is none, you can approve the closure through the unanimous consent of members. No matter what method you use, you have to make sure that it is recorded in the minutes of the meeting in which you conducted the voting.
How To Dissolve An LLC In Iowa
Once all of the LLC members reach a decision, you will have to take care of the process that the state has set. To help you have a better understanding of what you should do, here is a simple step-by-step guide:
Step 1: File the Articles of Dissolution.
As stated earlier, dissolving an LLC requires you to submit formal paperwork. In Iowa, this document is known as the Statement of Dissolution. The filing comes with a $5 fee. The Business Services Division of the Secretary of State normally takes 2-3 business days to finish processing LLC filings. However, if you submit in person, you can request them to process your documents while you wait. See to it that you make your checks payable to the Secretary of State.
The statement needs to have the name of your LLC and a declaration that it is dissolved. You can submit the documents to the following address:
Business Services Division
Lucas Building, 1st Floor
Des Moines, Iowa 50319
Phone: (515) 281-5204
Fax: (515) 281-7142 or (515) 242-5953
Once you file the Statement of Dissolution, your LLC forfeits the protection of its company name, which will then be available to other business entities.
Step 2: Close any business tax accounts.
Depending on the activities of your LLC, you may have to maintain various tax accounts in different state departments. If that is the case, you will have to make sure that your company has no pending obligations.
Generally, Iowa LLCs do not need to obtain tax clearances for the dissolution. However, you will have to pay off all the taxes and fines that your LLC owes to avoid any possible legal issues in the future.
Here are the common taxes that Iowa LLCs have to pay:
- If your LLC has or had employees in Iowa:
- Unemployment Insurance
- Employee Withholding
- If your LLC sells or has ever sold taxable goods and services in the state:
- Sales And Use
Closing business tax accounts usually requires the filing of a final return to the state agency in charge. Check with the appropriate department if you need to submit formal paperwork. You should also state in your Internal Revenue Service (IRS) form that it will be your LLC’s final return.
Step 3: Complete the winding-up process.
Successfully filing for dissolution does not mean you have no more responsibilities. Your company will have to finish the winding-up process. Here are the things you need to do:
- Liquidate all the assets of the LLC and remove all its liabilities based on the priorities that the law has set.
- Let all known claimants know about your LLC’s dissolution. You can do this by sending a notice informing them of where and until when they can submit their claims.
- If your LLC has remaining assets after settling all of its obligations, distribute them among members depending on ownership interests.
- If your business has any business licenses and permits, cancel them.
- You may need to file IRS Form 966 within 30 days of dissolution.
- You may have to close the IRS account associated with your LLC’s Employer Identification Number (EIN). To do this, send a letter to the IRS. Include the complete legal name of the company, its EIN, business address, and the reason for requesting the closure of the account.
- If there are bank accounts or credit lines under the name of the company, make sure you close them.
Get Help From Experts
Voluntary dissolution is necessary to inform the state of the termination of your business operations. Knowing how to dissolve an LLC in Iowa can help you get started. However, the whole process may involve the completion of multiple tasks. If you think that it will be too much for you to handle all of them, then you can turn to experts. Contacting a reliable third-party organization like DoMyLLC can lessen the burden and streamline the whole process for you.
Business Filing Section