Ending the life of your business is never an easy decision. The process itself, however, doesn’t have to be complicated. If you own an LLC in Arizona and for any reason decided it’s time to close it, this post it for you.
To dissolve an LLC in Arizona, there are several steps you’ll need to follow and a few important considerations to keep in mind. Below, we’ll go over everything you need to know to do it correctly and avoid any issues.
Before we discuss how to dissolve an LLC in Arizona, let’s first take a look at the basics of LLC dissolution:
Legally dissolving an LLC means that you are formally ending its existence in the eyes of the law. It releases the LLC from any legal responsibilities (such as filing annual reports), and it prevents the company from incurring any new debts.
There are three main types of LLC dissolution: judicial, administrative, and voluntary. Each type occurs under different circumstances, so it’s important to know which one applies to your business.
This type of LLC dissolution is initiated by the Arizona Corporation Commission (ACC) if an LLC fails to comply with state regulations (like not filing annual reports or paying required fees). In many cases, administrative dissolution can be reversed if the LLC addresses the reasons behind the dissolution.
Judicial dissolution occurs when the dissolution is ordered by the court, and this can happen due to reasons such as illegal activities, fraud, or situations where it becomes impossible to continue business operations.
Voluntary dissolution is initiated by the LLC members themselves, typically through a vote or decision by the members to end the business. It’s the most common type of dissolution, and it requires LLCs to follow a specific process outlined in the company’s operating agreement and state laws. This is the type of LLC dissolution we will focus on in this article.
If you and the other members of your LLC have decided it’s time to throw in the towel, it’s essential to follow the correct process for dissolving the company. Failing to do so can result in a range of complications, but, thankfully, the process of dissolving an Arizona LLC is relatively simple.
To dissolve your LLC in Arizona, simply follow these five steps:
To dissolve your LLC, you must first vote to approve the dissolution. For a single-member LLC, the decision is straightforward and lies in the hands of a single person. For multi-member LLCs, though, a formal vote will be required.
Owners of a single-member LLC are not required to seek approval from anyone else before dissolving their company; instead, the decision is solely theirs to make. For a multi-member LLC, the company’s operating agreement typically outlines the procedure for voting on dissolution, including the required majority needed for approval. If your company has more than one member, be sure to refer to its operating agreement to see how the dissolution vote should proceed.
How to go about dissolving an LLC is largely determined by the company’s operating agreement. The procedure for voting on dissolution is one element that the operating agreement will cover, but it will also outline other aspects of the dissolution process. This includes things like how to distribute assets, cancel contracts, handle debts, and notify creditors. Because of this, any dissolution process should always begin with a careful review of your LLC’s operating agreement.
Once the decision to dissolve your LLC has been made, the next step is to wind up all of your business affairs. This can include things like:
Unfortunately, business debts don’t go away just because a company is being dissolved. Before you’ll be able to legally dissolve your Arizona LLC, you’ll need to notify all creditors and claimants and settle any outstanding debts that the company has. All business debts, such as credit card debt, loans, or leases, must be paid off before the dissolution can be finalized.
Once debts are settled, you’ll then need to distribute any remaining assets among the LLC members. Your company’s operating agreement should outline how this process is to be conducted.
The final step before you can legally dissolve your Arizona LLC is to file final state and federal tax returns. If your company owes any taxes, these will need to be paid as well.
Once you’ve filed a final tax return and paid any taxes owed, you’ll then need to obtain a tax clearance from the Arizona Department of Revenue. This document will confirm that all state taxes have been paid, allowing you to move forward with the dissolution.
Once you’ve completed all of the steps listed above, you can formally dissolve your Arizona LLC by filing Articles of Dissolution with the Arizona Corporation Commission (ACC). This form is available as a PDF on the ACC’s website. Here is a screenshot of what its first page looks like:
Be sure to carefully review this form and answer all the required questions to avoid any mistakes that could lead to delays. Once the form is complete, you can then file the Articles of Dissolution online or by mail.
To file online, you can visit the Arizona Corporation Commission’s eCorp system. Log in or create an account, then select “File for an Existing Entity” from the dashboard. You can then search for your LLC by entering its name or entity ID. Once you find your company, select the option to file the “Articles of Dissolution” and fill out the form. You will also be required to pay a $35 filing fee before you can submit your filing.
To file by mail, complete the Articles of Dissolution form and include a check or money order in the amount of $35 for the filing fee, then mail the form to this address:
Arizona Corporation Commission
Corporations Division
1300 W. Washington St.
Phoenix, AZ 85007
You will receive a confirmation letter once your filing has been processed. However, keep in mind that processing times for mailed filings typically take longer than online submissions.
Dissolving a company you’ve worked hard to build can be a stressful time. However, you can make it at least a little less stressful by ensuring that you are following the correct dissolution process.
Remember, when one door closes another opens, and the lessons you learned from owning your LLC are sure to help you in your next venture. Closing a business can be heartbreaking, but think of it as an opportunity to start something new!
There are a lot of different reasons why people voluntarily choose to dissolve their LLC. But if you and the rest of the LLC's members have determined that you no longer wish to operate the company, it's essential to formally dissolve it. Going through the process of legally dissolving your LLC will eliminate all of the company's ongoing obligations so that you are truly free to move on from it.
The only cost associated with dissolving an LLC (aside from things like paying outstanding debts and taxes) is to pay the fee for filing the Articles of Dissolution. In Arizona, this fee is $35.
Yes, you can fill out and file the Articles of Dissolution completely online by visiting the Arizona Corporation Commission's eCorp system. In fact, this option is recommended for faster processing times.
Processing times can vary, but online filings are typically processed within a few business days. Filing by mail can take several weeks, depending on the volume of filings the ACC is dealing with at any given moment. However, expedited processing for mailed filings is available for an additional fee.
If you don't formally dissolve your Arizona LLC, it will remain an active company in the eyes of the state. This means that the company will continue to incur annual fees, taxes, and compliance obligations.
If your LLC is registered to do business in multiple states, you'll have to dissolve it in each state individually. Keep in mind that each state will have its own procedures, forms, and fees for dissolving an LLC.
This portion of our website is for informational purposes only. Tailor Brands is not a law firm, and none of the information on this website constitutes or is intended to convey legal advice. All statements, opinions, recommendations, and conclusions are solely the expression of the author and provided on an as-is basis. Accordingly, Tailor Brands is not responsible for the information and/or its accuracy or completeness. It also does not indicate any affiliation between Tailor Brands and any other brands, services or logos.
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