Aspiring entrepreneurs create LLCs in Virginia for many purposes, and when they achieve them, they often need to dissolve their businesses.
You may also need to end your LLC for unforeseen reasons, like internal conflicts, increased market competition, rising costs, or a member’s retirement or death.
Regardless of your reason for dissolving your LLC, you must follow a procedure to wind up your business in Virginia.
In this article, you’ll discover how to dissolve your Virginia LLC and wind up your business affairs, ensuring you remove any future fees, fines, or liabilities.
LLC members voting to dissolve their LLC must first conform to Virginia’s rules for voluntary closure.
These include:
Dissolution is the process of officially dissolving your Virginia LLC with the Virginia Secretary of State by submitting articles of cancellation to remove its independent entity status.
Once dissolved, your LLC will cease being liable for its state and federal tax obligations and legal or financial liabilities.
Dissolution falls into three categories: voluntary, administrative, and judicial.
Voluntary dissolution is when an LLC’s members choose to close their business.
This can happen because of a “triggering event” written into the LLC operating agreement, such as a member’s death or the LLC fulfilling its original purpose.
LLC members who vote to dissolve an LLC must comply with its operating agreements’ procedures for voluntary closure, including formalities such as obtaining a percentage or number of votes required to trigger dissolution.
An LLC without voluntary procedures written into its operating agreement must follow the Virginia State default dissolution rules.
Administrative dissolution happens when the Virginia state imposes an LLC dissolution for reasons specified by state law.
Common reasons for administrative dissolution are failure to file an annual report, pay state taxes or fees, or have a Virginia-designated registered agent.
A Virginia court implements judicial dissolution, usually when a disgruntled LLC member files for litigation against the business because of disputes with fellow members.
To dissolve your Virginia LLC, you must file form LLC-1050, Articles of Cancellation, and confirm you have completed the winding-up process.
A Virginia LLC manager or member must sign the articles of cancellation.
LLC members who wish to vote to dissolve their businesses must follow the rules for dissolution in the LLC operating agreement.
Often, this requires a majority member vote to dissolve the LLC. Still, the conditions for voluntary closure can differ depending on what members agree upon when forming their business.
Your operating agreement should outline the procedures and regulations for dissolving your Virginia LLC, and you should refer to it to confirm that your reason for dissolution complies with its conditions.
Some operating agreement rules can include the following:
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.
LLC members voting to dissolve their LLC must first conform to Virginia’s rules for voluntary closure.
These include:
Before Virginia State approves your dissolution request, you must prove you have ended your business affairs and paid any outstanding debts and taxes, known as winding up your business.
Most U.S. state’s LLC statutes outline the steps necessary to wind up your LLC; these steps often include:
In Virginia, you must pay all your business debts and inform your creditors and vendors that you are dissolving your LLC so they can claim any money owed.
Not notifying your creditors before dissolving your LLC can cause litigation and a loss of business credit.
Virginia State does not require an LLC to get tax clearance before submitting articles of cancellation with the State Corporation Commission, nor does the state require an LLC to file an annual report.
However, you must pay and file your last tax return with the IRS, the Virginia Department of Taxation, and any other taxes your LLC is liable for, such as sales and use tax.
Your last step in dissolving your Virginia LLC is filing your articles of cancellation of a Virginia LLC (Form LLC-1050) with the Virginia State Corporation Commission.
Out-of-state/foreign LLCs must file an application for a certificate to cancel a Foreign LLC in Virginia (Form LLC-1056).
You have 3 choices for submitting your Virginia articles of cancellation:
Closing your LLC often takes the same effort as starting it.
But you must complete all the winding-up steps before the state will approve your dissolution.
If, for any reason, you cannot complete any of the steps yourself, consider consulting with a Virginia dissolution lawyer.
Many reasons exist for a business owner or members to decide that dissolving their LLC is the right decision.
Including:
Not submitting your LLC's articles of cancellation to the Virginia State Corporation Commission can cause state fees and penalties, and an undissolved LLC is also at risk of identity theft.
To dissolve your LLC in Virginia costs $25.
You can submit your Articles of Cancellation online using the SCC Clerk’s Information System.
Standard LLC dissolution takes 1 to 2 weeks in Virginia; however, you can pay $200 for a same-day expedited service or $100 for next-day dissolution processing.
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.
Products
Resources
@2024 Copyright Tailor Brands