Eventually, the time may come to dissolve your limited liability company in Oklahoma. Maybe the business is no longer making money, or maybe you’ve had this LLC long enough and are ready to move on to something new. Perhaps it’s a multi member LLC, and you and your fellow members cannot agree on key business decisions.
Whatever the reason, it’s important to follow the proper process. Failure to do so could create risk not only for the business but also for you personally. This post discusses the basics of LLC dissolution, the types of dissolution, and the specific steps you must take to dissolve your Oklahoma LLC legally and correctly.
Dissolution means the end of your LLC’s existence in the state where it was organized and is registered. While there are several ways this can come about, all of them officially and legally dissolve your business.
Dissolution is the act that terminates your LLC’s existence as a business. When it’s done properly, it protects you from all future liabilities relating to your LLC’s operation. Dissolution can be initiated by the member or members, or it can b directed by the State of Oklahoma or the courts. In any case, it removes your company’s independent legal status with the Oklahoma Secretary of State. It tells the State of Oklahoma and everybody else that your LLC no longer operates in the state.
LLC dissolution in Oklahoma can be voluntary or involuntary. There are two types of involuntary dissolution, administrative and judicial.
The Oklahoma Secretary of State can administratively dissolve an LLC when it fails to meet its legal obligations to the state. Examples of unmet obligations include failure to file the Annual Certificate/Annual Report within the allotted time and failure to pay the franchise fee.
Judicial dissolution can be ordered by a court, often in response to a petition from one or more of the members. The underlying cause might be:
Voluntary dissolution takes place when an LLC’s members choose to terminate the business. There are a couple ways this could happen:
Here are the steps you are required to follow to voluntarily dissolve your Oklahoma LLC:
Some Articles of Organizations or operating agreements specify triggers that will mandate dissolution. An example is the death of a member. If this is the case, no vote is necessary, and you can proceed to the next step.
The operating agreement may state that the LLC can be dissolved by a majority vote of the owners. However, if the documents don’t address this topic, a unanimous vote is required to voluntarily dissolve an LLC in Oklahoma.
A single member LLC can be voluntarily dissolved by the decision of the lone member. If an LLC has more than one member, there must be a vote. Depending on the operating agreement, dissolution may require a unanimous vote or merely a majority vote.
The LLC operating agreement should contain rules about dissolution. These ought to cover not only whether a unanimous vote is required but also how the LLC will discharge its liabilities, close out its business activities, and divide its remaining assets among its members. Anything not specified is governed by the laws of the State of Oklahoma.
This document, created by the LLC and signed by the members, states that the LLC will cease operations, pay its creditors, distribute assets to its members, and go out of existence.
An LLC can’t just close down shop in a day and stop doing business. It has to methodically wind up various aspects of its business operations before it can dissolve. These actions can include:
If there are any pending lawsuits, these will have to be resolved.
The LLC must notify all creditors and claimants about the pending dissolution. If the LLC has debts, such as credit card debt or bank loans, these have to be taken care of before the LLC can be dissolved.
Your LLC provides you with protection from personal responsibility for its liabilities, and you may dissolve your LLC if it is losing money. However, the LLC must give all creditors the opportunity to collect any amounts that they are owed. Failure to resolve outstanding debts could possibly compromise liability protection and expose members to personal liability for these balances.
Once all debts are satisfied, LLC must sell any remaining assets and distribute the proceeds to the members. The operating agreement will often dictate how the assets will be divided.
You must let several authorities know that you will no longer be doing business and paying taxes:
Your official dissolution is accomplished by filing a form called Articles of Dissolution of an Oklahoma Limited Liability Company with the Oklahoma Secretary of State. This is mailed to the Secretary of State at the address listed on the form.
The form requires the name of the LLC, the date of formation, the reason for dissolution, and the effective dissolution date (if it’s different from the date the form is received). The form must be signed by a manager, be dated, and list the signer’s name and address.
Once this form has been filed, your LLC is officially dissolved.
Some people dissolve an LLC because they have been in the business as long as they want, and they’re ready to retire or to seek new opportunities. Other dissolutions come about because of disagreement between the members or lack of business success. In any case, dissolving something that you put so much of yourself into can be an emotionally fraught process.
Filing the Articles of Dissolution is, in a sense, the final curtain, but most of the dissolution activities occur before that definitive date when you send the form to the Oklahoma Secretary of State. Actually making the decision to shut down may be the hardest part of the process. We have detailed the steps you need to take between that decision and the signature on the form that definitively puts your LLC to rest.
Before you wrap it all up, take a moment to congratulate yourself on the risk you took, the business you built, and the experience you gained. Good luck with whatever comes next!
Reasons for dissolving an LLC include:
If you plan to stop doing business, it’s important to legally dissolve your LLC to keep the business from accruing liabilities and to protect yourself from personal liability.
You must remit a $50 fee along with your Articles of Dissolution.
While the Articles of DIssolution form is online, you must sign it and mail it to the Oklahoma Secretary of State.
It might take up to several months to wrap up all the wind-down tasks, but filing the Articles of Dissolution is a quick and simple process. You may make the dissolution effective as soon as the document is filed, or you can name a later date.
If you don’t properly dissolve, Oklahoma will expect you to continue to file reports and pay the franchise tax. You may have to pay someone to continue to produce paperwork on your company’s account. You may not be completely protected from personal liability if your LLC still exists but is no longer functioning.
You will need to file dissolution documents in every state where you’re registered. You will have to meet the tax department, secretary of state, and employment agency requirements of each state.
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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