Making the decision to dissolve your Nebraska LLC means you need to follow a series of steps for its proper closure. The processes have to be followed and done properly, and you need to follow the state laws that govern the legal dissolution of an LLC.
In this post, we’ll take a look at what you need to know about dissolving your Nebraska LLC for good, the reasons why you have to do it, and how to go about the act in Nebraska.
The act of dissolving your Nebraska LLC results in permanently closing your LLC, and rendering it unable to conduct business going forward. It eliminates the LLC’s status as an independent legal entity, which means you can no longer use it to protect yourself from business liabilities.
In order to successfully dissolve your LLC, you have to follow the state statutes that cover the dissolution of an LLC, take the appropriate actions, and file a certificate of dissolution with the Nebraska Secretary of State.
The period between making the decision to dissolve the LLC and filing the certificate of dissolution is known as the winding down period. The LLC is responsible for settling debts, paying taxes, and distributing the remaining assets to the members according to the operating agreement. Once all of these requirements are successfully completed, the LLC can file its certificate of dissolution.
There are three different ways to dissolve an LLC. They include administrative, involuntary, and voluntary. The type of dissolution that applies to your LLC depends on the circumstances that are leading to the dissolution.
An administrative dissolution is one that’s done by the state of Nebraska, and it happens when the operators of an LLC fail to submit the required filings. The SoS will dissolve the limited liability corporation if it’s found that it’s not in good standing or taxes haven’t been paid.
This is often done without notice, which means LLCs often continue to operate under the assumption the company is in good standing.
A judicial dissolution involves asking a court to dissolve the LLC for non-performance or when the members can’t get along with each other and can’t come to a resolution. The court looks at the situation that’s being presented, hears arguments, then makes a decision to dissolve the LLC based on the evidence that’s presented.
A voluntary dissolution is one where the members agree to dissolve the LLC and begin the process of winding down the operation. The reason for dissolution can be anything as long as the process follows the clause for dissolution laid out in the operating agreement.
Here are the steps that you need to follow if you’re choosing to engage in a voluntary dissolution for your LLC.
The members of the LLC have to vote to dissolve the LLC in order for it to be legal and binding. A majority decision or all members have to agree to dissolve the business based on the operating agreements’ requirements for a binding vote.
An operating agreement can also contain a trigger for dissolution in the event one of the LLC members passes away. This event is considered a voluntary dissolution as it was agreed upon during the drafting of the operating agreement.
Dissolving a single member LLC is slightly different from dissolving a multi-member LLC. The single member is the sole vote in the corporation and is fully responsible for the administrative work that follows. In contrast, the multi-member has to call a vote, get agreement, then divide the administrative tasks among the members.
When you formed your LLC, you also created an operating agreement. The operating agreement contains different clauses that guide how the business is run, and it also contains a dissolution clause.
The dissolution clause lays out the reasons for a dissolution (IE death of a member or lack of funds to operate), and how to go through the process. Some of the items in the clause can include items such as:
In the event there are no members in the LLC, a legal representative of the last member can wind down the LLC and file for dissolution. The legal representative has the powers of a sole manager and is free to make decisions of their own accord.
After the vote has been made in favor of dissolution, it’s time to wind down the operations of the LLC. During this period of time, notifications need to go out to anyone who has an interest in the LLC. That includes:
The purpose of an LLC is to protect its members against liabilities such as debt, but the debts can survive the dissolution of an LLC if they’re not resolved. During the wind down period, you have to give your creditors the opportunity to make a claim against the LLC for payment. This is done by:
It’s worth noting that some claims can be considered valid even if they’re received after the deadline. A defect in the claims process can make a claim eligible for enforcement against the LLC. However, a creditor that was properly notified and failed to execute their claim by the deadline is permanently barred from making an attempt to collect.
Once all claims and debts have been resolved, the remaining assets can be distributed to the members according to the operating agreement.
The IRS has to be notified that the LLC is being dissolved, and any final tax payments have to be remitted. The Nebraska Department of Revenue requires all outstanding tax returns to be filed within 20 days of the date the business is officially closed. There is no requirement to provide proof that taxes at the federal and state level have been paid to dissolve the LLC.
The statement of dissolution for a Nebraska LLC consists of a single page that also acts as an affidavit. The page requires you to:
The form can be mailed to:
Robert B. Evnen, Secretary of State
P.O. Box 94608
Lincoln, NE 68509
You can also bring the form to the Secretary of State’s office that accepts the form in your vicinity, or you can file it online at www.nebraska.gov/apps-sos-edocs/.
Dissolving an LLC for any reason can make you feel like you’ve failed, even when circumstances were beyond your control. Instead of looking at the dissolution as something negative, consider it as part of your business education and use your experience to build your next LLC.
The end of your LLC should be viewed as a fresh start for your next venture. Consider what went wrong with your business that led to its closure, and use that as a road map for what not to do. You’ll be more informed, and you possess experience that makes it easier to start a new LLC.
Be aware that the dissolution of your Nebraska LLC needs to be final and completed before you decide to file for your next LLC. This ensures that you won’t have to deal with issues that weren’t fully closed out by the time the dissolution finished, allowing you to focus on creating a bigger and better business venture.
You should dissolve your LLC when you get into financial trouble that you can't pull out of, there's a dispute between members that can't be resolved, or there's no further need for the LLC. Properly dissolving the LLC prevents financial liabilities from becoming an issue down the road.
It costs $30 to file in person, and $25 to file online.
Yes, you can dissolve your Nebraska LLC online through the Secretary of State's electronic document delivery portal.
It takes about two to three business days to dissolve an LLC in Nebraska if you file online or in person. Filings that are mailed in take longer due to the time needed for delivery.
If you don't dissolve your Nebraska LLC, you still have to keep it in good standing and file tax returns, even if you don't do business. You're also still responsible for paying fees and administrative costs to keep the LLC in good standing.
Also, if you do not take official steps to dissolve your Mississippi LLC and fail to file the required annual reports, the State can and will initiate Administrative Dissolution.
If your LLC is registered in states other than Nebraska, you have to follow the rules of each state for dissolving the LLC. Dissolving an LLC in Nebraska does not automatically dissolve the LLC in other states.
Also, if you do not take official steps to dissolve your Mississippi LLC and fail to file the required annual reports, the State can and will initiate Administrative Dissolution.
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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