Starting and running an LLC in Ohio can be exciting and rewarding but also quite challenging. For every business that thrives, others can falter and fail for many reasons. If you’ve started an LLC in Ohio and have to close your business, now is the time to dissolve it legally.
Dissolving a business can be a relatively simple process, but that ultimately depends on the scale of your operations. If you have multiple vendor partners, outstanding debts, and numerous employees, dissolution can be complicated. However, if you’re running a single-member LLC with minimal overhead, you can dissolve your business in a matter of days.
Regardless of how you got to this point, you must know the steps involved when dissolving an LLC in Ohio. Here’s everything you need to know about how this process works.
Dissolving an LLC means legally ending your business with the Secretary of State. The primary purpose of dissolution is to avoid any potential penalties or lawsuits against your business. As far as the Ohio state is concerned, you just have to submit a Certificate of Dissolution form with the SoS office and pay a $50 administrative fee. Once they approve your form, your business is officially dissolved.
There are three primary types of LLC dissolution: administrative, judicial, and voluntary. Each method can affect you and your business differently, so here’s a breakdown of how they all work.
Some LLC owners don’t want to go through the dissolution process. Perhaps they don’t have any assets or debts, so they don’t feel like dissolution is necessary. In this case, the Secretary of State will dissolve your business, typically after you fail to pay your license or registration renewal. Overall, administrative dissolution is when the SOS closes your LLC without any input from you or any other company owners.
It’s rare for the court to force an LLC to dissolve, but that can happen with judicial dissolution. In this case, a judge orders you to wind up and dissolve your business. Sometimes, this can happen if your company (or any owners) are found guilty of fraud. In other cases, judicial dissolution may be required if a founding member dies and the operating agreement doesn’t have a plan of action in place.
Most LLC owners voluntarily dissolve their businesses, which is what we’re outlining in this article. Voluntary dissolution is the simplest and most effective method because you’re in charge of winding up your company. Once you’ve finished dissolving your LLC, you are no longer responsible for it.
The first step is to make sure that everyone within your LLC is on board with dissolving the business. If you fail to complete this step, you could jeopardize the entire dissolution process. However, this vote may be influenced by multiple factors, such as:
If you’re running a single-member LLC (SMLLC), you don’t have to take a vote because you’re the only one in charge. With a two-person partnership, the vote must be unanimous. If there are three or more founding members of the LLC, the majority rules.
When drafting your LLC operating agreement, you should outline how and when to take a dissolution vote. Doing this at the beginning ensures a smoother process when dissolving your business. For example, you can determine whether members must be present to vote or cast their vote remotely (or via proxy).
Winding up a business means closing it from all angles. Some factors you may have to consider when winding up an LLC include:
Realistically, you may have outstanding balances on business credit cards, loans, and other accounts. You must notify these creditors that you’re dissolving the business and settle these balances as soon as possible. Depending on the nature of your dissolution, you may have to negotiate a payment plan that works within your budget.
Another option is to file for bankruptcy. Since you’ll be dissolving the business anyway, Chapter 7 bankruptcy may be the best choice because it liquidates your debts. If you’re trying to restructure the debt and remain open, you’d want to file Chapter 11 bankruptcy.
Finally, if you own any assets, now is the time to liquidate them. Fortunately, you can use funds from liquidated assets to help pay any debt balances, or you can use these assets in lieu of payments, depending on the creditor. For example, if you have an equipment loan for the machinery you use in your business, you may be able to return the equipment to reduce your debt.
In Ohio, LLCs must submit a Certificate of Tax Clearance with the Ohio Department of Taxation. Along with the form, LLC owners must also file any final returns and pay any outstanding tax balances. Once all of this has been completed, you can then file a Certificate of Dissolution with the Secretary of State.
We’ve saved the easiest step for last. Once you’ve completed every other step on this list, you can finally fill out and submit the Certificate of Dissolution with the Ohio SOS office. It should take about three to seven days to process your request.
As you can see, dissolving your LLC in Ohio is a relatively straightforward process. The more organized you are with your company finances and documentation, the faster you can wind up your operations and submit a Certificate of Dissolution form. Dissolving your LLC is always the smartest choice if you’re planning to shut down the company.
The main reason to dissolve your LLC is to prevent fraud or legal action against your business in the future. For example, scammers may use your business to defraud customers. If that happens, you may technically still be considered the LLC owner, which could put you in a tense legal situation.
The paperwork to dissolve your LLC requires a $50 administrative fee. Other than that, you may still owe outstanding debts or taxes, or you might have to pay money to wind up your business faster.
Yes, you can fill out and submit the Certificate of Dissolution Form (along with a $50 payment) online with the Ohio Secretary of State.
Typically, the Secretary of State’s office can process your paperwork within three to seven business days. However, winding up your business, including paying off debts and liquidating assets, can take several weeks or months, depending on the complexity of the situation.
Realistically, if you don’t voluntarily dissolve your Ohio LLC, the Secretary of State will do it for you. Once you fail to re-register or certify your business, the SOS office will pursue an administrative dissolution.
If your LLC is registered in multiple states, you must file dissolution paperwork in each state. You must also settle any state-specific taxes and debts, such as with state-licensed vendors and third-party suppliers.
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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