The time may arise when you decide that dissolving your LLC is a necessary action. If so, knowing what steps to take can help make the process less challenging.
Below we discuss the reasons for dissolving your Minnesota LLC, the various types of dissolution, and the requirements and steps you’ll need to take to accomplish this action here in the state of Minnesota.
To dissolve your LLC means you are taking official action to remove its independent legal status in your registered state. This change in status occurs with a cancellation (voluntarily or involuntarily) with the Minnesota Secretary of State’s Office.
To move forward requires specific steps in order for your state to accept your notice of dissolution. These steps often include notifying creditors and applicable federal and local government agencies, attending to any outstanding debts, and attending to all taxes.
Only once you follow these essential steps for dissolution will you be protecting yourself from potential liabilities in the future.
There are different reasons for dissolution, and in Minnesota, those reasons are defined in state statutes. Generally, they fall into three distinct categories – Administrative dissolution, Judicial dissolution, and Voluntary dissolution.
Administrative dissolution is initiated by the State, removing all the rights, authority, and powers of the LLC when it fails to meet its obligations.
A Judicial dissolution involves the legal process where a court is the one to order a dissolution of a particular limited liability company (LLC).
Various reasons may be cited for such action, including:
For a Voluntary dissolution, a Minnesota LLC’s members must unanimously vote to cease doing business.
This type of dissolution can occur in two ways:
1. In accordance with dissolution triggers included in the LLC operating agreement, which may include the departure or death of a member.
2. Due to a vote by members to dissolve the limited liability company because of financial issues or unresolvable internal disputes.
Once dissolution is determined to be a necessary action, you will need to diligently perform the following steps.
Before alerting the Secretary of State’s office of dissolution, LLC members will need to conduct and record a vote to dissolve the LLC. Take the time to discuss this decision among all members, providing the reasons for doing so, and understand that a unanimous vote is necessary here in Minnesota.
One or more individuals can form an LLC in Minnesota. Depending on which applies, there may be other nuances that need attention prior to dissolution. The LLC operating agreement will need to address these.
To dissolve a single-member LLC, the one owner/member must adhere to the operating agreement in place, and take all steps individually to dissolve the business.
To dissolve a multi-member LLC, a vote must first take place among the remaining members, taking into account what is stipulated in the operating agreement.
Be sure to record the dissolution vote in the meeting minutes.
When taking steps to dissolve your LLC, consult your operating agreement first and understand the included terms for dissolution.
Inclusions often found in LLC operating agreements include:
It is essential that you follow any dissolution clause included in that LLC operating agreement. While this process will be somewhat simpler for single-member LLCs, it can become more involved for multi-member ones and you will need to count on that clause to help you through the process more readily and agreeably.
When voting to dissolve an LLC in Minnesota voluntarily, the following requirements must be met:
An important part of the LLC dissolution is the winding up of the different aspects of your operations. Examples of the activities included in this “winding up” include:
While members are protected in cases of debts accrued by the LLC, those debts still need to be paid. Follow these steps:
Before dissolution can occur in Minnesota, you will need to notify tax agencies and settle remaining taxes. In other words, file final tax returns and obtain tax clearance.
Common taxes to address may include:
In Minnesota, there is no requirement to obtain a tax clearance certificate for dissolution to be finalized, however, it is recommended.
The Minnesota Secretary of State requires the filing of two documents: the Statement of Dissolution and the Statement of Termination. These documents may be submitted in various ways, including online, by mail, or in person. The fee amount will depend on which method you choose.
File a statement of dissolution of your LLC with the Minnesota Secretary of State once the organization has been dissolved due to one of the events listed under Minnesota Statute 322C.0701. This document can be submitted either in person, by mail, or online.
You will need to include information such as the following:
The fee for Minnesota LLC dissolution is $35 when submitted via the mail. You can also do an expedited walk-in filing for $55. These fees are payable to the MN Secretary of State.
File a separate Statement of Termination form, which requires information such as the following:
This document can be filed in-person, by mail, or online at www.sos.mn.gov.
Filing fees for the Statement of Termination are as follows:
Above are the requirements for dissolving an LLC in Minnesota. Once you file the Statement of Dissolution and Statement of Termination, you have formally terminated the LLC’s status as a business registered in the state of Minnesota.
Whether you unanimously vote to close your business or your operating agreement stipulated dissolution in specific circumstances (e.g., death of a member), it is rarely easy to let go. Yet, you can still put what you have learned during the forming and running of that LLC to good use should you wish to try something new.
There can be several reasons why you should dissolve your LLC, including:
To dissolve an LLC in Minnesota, the costs involved include:
To dissolve your Minnesota LLC online, file a Certificate of Dissolution and Certificate of Termination with the Secretary of State.
In general, it will take 5-7 days to dissolve your Minnesota LLC after submission of the Statement of Dissolution and the Statement of Termination.
If you do not officially dissolve your Minnesota LLC, you will potentially be liable for annual fees and the filing of tax returns. Failing to do these things and not filing an annual renewal notice can also lead to Administrative dissolution of the LLC by the 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.
Terry is a serial entrepreneur with over 25 years of experience building businesses across multiple industries – construction, real estate, e-commerce, hotelier, and now digital media. When not working, Terry likes to kick back and relax with family, explore Taoism’s mysteries, or savor the taste of fine Italian red wine.
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