The business cycle can be exhilarating and complex. In addition to the highs and lows of launching and running a limited liability company (LLC) are the challenges that come when it’s time to cease operations.
The decision to dissolve your LLC can come with a great deal of emotion and mixed feelings. In some cases, it can be a time of great sadness and, at others, of profound relief.
Knowing the process for how to dissolve an LLC is essential to ensure the dissolution process goes smoothly and that your LLC in Maine will cease to exit with no liabilities.
An LLC dissolution is the legal process of ceasing operations for your company. With an LLC dissolution, you formally stop running the business and file the appropriate paperwork with the state of Maine.
By legally ceasing to conduct business in Maine, you will no longer be allowed to operate as that business entity within the states.
The LLC dissolution process is important in that it’s a systematized, orderly way to stop your business operations. By doing the steps outlined here, you will ensure your LLC closes properly, that the right parties are informed and that all outstanding financial obligations are paid.
The legal business dissolution of an LLC is the process that is undertaken to cease the business from legally operating in Maine. This process may come about in multiple ways. Each has the same effect – it ceases the company from existing as a legal business entity.
You may choose to dissolve your LLC or the decision may be made for you. There are various ways in which an LLC may be dissolved. Here is a closer look at each.
In an administrative dissolution, the state of Maine takes steps to complete the dissolution. In this case, the state determines that the LLC is no longer eligible to operate within Maine.
States are given broad authority to act in the cases of LLCs that are not acting properly. This latitude covers cases where an LLC is not complying with state laws or regulations.
A lack of compliance with state laws or regulations is the most common dissolution trigger. Often, this comes about from a failure to pay state taxes, failure to file required reports with state agencies, failure to keep a registered agent in the state, or failure to follow Maine laws.
In some cases, a court will order the dissolution of an LLC. This process is sometimes referred to as the “corporate death penalty.”
In a judicial dissolution, the court issues an order mandating the LLC dissolve. The reasons for such an order are varied. The most common reason is a dispute between one or more members (owners) and other members that cannot be resolved. The aggrieved members, if unable to reach agreement, can ask the court to dissolve the LLC on their behalf.
Other reasons for a judicial dissolution include:
A voluntary dissolution occurs when the members opt to shut down the company themselves. The process by which a voluntary dissolution occurs are spelled out in the operating agreement, the legally binding document that guides various processes related to the LLC.
The voluntary dissolution of the company may be done by agreement of the individual members. It may also be triggered by an act covered within the operating agreement, such as the death of a key member.
The vote to dissolve is typically a weighted majority. That means it’s not a simple majority vote of the individual members but instead based on the weights of the votes, meaning that those with a larger ownership stake have a larger number of votes.
The operating agreement will detail the process used to dissolve the business.
Here is a look at the steps necessary to complete your Maine LLC dissolution.
The vote is an essential component of the dissolution process. You will need to turn to the operating agreement to determine the procedures, and weights, used for completing the vote. In many cases, a vote to dissolve the company requires a unanimous vote, not a simple majority.
Once you’ve conducted your vote, it’s important to take detailed notes and file a record of the meeting with other important company-related documents.
There are several types of LLCs that can be in play for your company. If you are a single-member LLC, then a vote will not be necessary. Instead, to dissolve your LLC, you need to complete the other steps listed here.
For a multi-member LLC, you will need to follow the guidance within your operating agreement for a vote.
The dissolution rules in your LLC operating agreement must be followed to avoid later disputes or legal action. The operating agreement will be your guide to multiple aspects of the dissolution process.
For example, the operating agreement likely spells out how company assets will be distributed before the dissolution. In addition, it will cover the payment of debts and the cancellation of contracts.
“Winding up” is the term used for completion of key business activities related to your dissolution. Winding up is a complex series of steps you need to take to ensure that all parties are communicated to properly.
Winding up steps include:
Your creditors and claimants must be notified to ensure that they are notified of the impending closure. Any debt obligations to creditors and claimants must be completed prior to filing paperwork with the state of Maine.
In addition to individuals and businesses, it’s important that all outstanding obligations are resolved. That means paying off any credit card balances or loans.
It’s likely you are aware of the creditors and claimants for your company. If not, some businesses choose to place a legal ad in various publications informing potential creditors and claimants of the pending closure.
The state of Maine does not require any clearance by the state tax authorities to cancel your LLC.
You will need to file a Certificate of Cancellation with the Maine Secretary of State to officially dissolve your LLC.
The form includes the following fields:
The Certificate of Cancellation can be printed out online and mailed to:
U.S. Postal Service
Department of the Secretary of State
Corporations, UCC and Commissions
101 State House Station
Augusta, ME 04333-0101
Third-Party Mailing Service
Department of the Secretary of State
Corporations, UCC and Commissions
6 E. Chestnut Street, 5th Floor
Augusta, ME 04330
There is a $75 filing fee. You may also request either 24-hour or immediate expedited processing for $50 or $100, respectively.
Dissolving your Maine LLC is an important step in the life of your business. By following the steps outlines here, you can be sure your LLC is dissolved properly with the correct votes, notifications and filings completed.
There are many reasons to dissolve an LLC. The company may no longer be profitable, a key member may die or be incapacitated, members may disagree on the future direction of the LLC or the LLC may be acquired.
It costs $75 to file a Certificate of Cancellation. Expedited 24-hour or immediate processing costs an additional $50 or $100, respectively.
You can download the form online but must mail in the required certificate.
Normally, it takes 5-10 business days to process the filing.
Failing to dissolve your LLC can result in additional liability and tax and regulatory obligations.
If your Maine LLC is registered in other states, you will need to dissolve it in each of those other jurisdictions.
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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