When a limited liability company is financially unsuccessful, has served its purpose, or you simply don’t wish to run it anymore, it’s time to close it down. However, you can’t just stop providing goods and services and walk away. You need to conduct a process called dissolution, which ends your LLC’s existence in a legal and orderly manner.
Read on for a discussion of possible reasons for dissolving an LLC, the different types of LLC dissolution, and the steps and requirements for dissolving an LLC in Alaska.
Hanging a “closed” sign on your office, storefront, or factory door doesn’t make the closure final and legal. Unless you terminate the business with the proper steps for an Alaska dissolution, the state will regard you as an ongoing business and will continue to expect required reporting and franchise fees.
Dissolution is the act of officially dissolving your LLC with your registered state. A significant step in that process is filing a certificate of dissolution with the Alaska Secretary of State. Once the dissolution application is accepted, your LLC is no longer active in Alaska, and it has no further obligations to the state.
To ensure the dissolution is accepted, you have to complete some other tasks. These include winding down business activities, settling outstanding debts, finalizing filings with tax and employment authorities, selling LLC assets, and distributing the proceeds to the members.
Dissolution falls into three categories: administrative, judicial, and voluntary.
Administrative dissolution is when the state dissolves an LLC due to the LLC’s failure to meet its obligations.
Administrative dissolution can happen in Alaska when:
In Alaska, the commissioner must give the LLC written notice of the delinquency and allow the company 60 days to contest.
Judicial dissolution, sometimes known as the corporate death penalty, is a legal process whereby a court orders dissolution.
Reasons can include:
Judicial dissolution is often initiated upon the petition of one or more members.
Voluntary dissolution is when an LLC`s members make a decision to shut down the LLC. This can happen in two ways:
These are the steps required to voluntarily dissolve your Alaska LLC:
The first step, and, for many LLC owners, the biggest one, is actually making the decision to dissolve. If there has been a dissolution trigger event, as defined by the operating agreement, the decision is made for them, and the LLC must dissolve.
If the members choose to dissolve, there must be a vote. Depending on the operating agreement, dissolution may require a unanimous vote or only a majority.
In a single-member LLC, the member may choose to dissolve the LLC for any reason without anyone else’s permission. In a multi-member company, the members must take a vote. Depending on the operating agreement, a majority vote may be sufficient, or a unanimous vote may be required. Once they have voted to dissolve, the members should record their decision in writing.
The operating agreement should dictate how dissolution takes place, so members need to read and understand it before they proceed. The rules might include:
As part of dissolution, an LLC will stop providing goods and/or services. There are several other actions you must take to wind up business activities in an orderly fashion:
If your LLC is struggling financially and it owes people money, you may close it, but that doesn’t erase its debts. Before you can dissolve, you have to inform your creditors and give them an opportunity to collect what you owe them. Your company will have to pay off credit cards, bank loans, and outstanding invoices. You also will need to resolve any pending lawsuits before dissolution can become final.
Once you have settled all these obligations, you must sell any physical assets. You will then distribute the LLC’s remaining cash to the members in accordance with the terms specified in the operating agreement.
Alaska does not require dissolving LLCs to obtain a tax clearance certificate. However, you cannot dissolve an Alaska LLC if you owe taxes. You must do final reporting and pay all amounts owed for sales tax and employee withholding tax.
It’s good practice to review all tax and employment reports and returns you have filed during your LLC’s existence. That will give you a list of the authorities to contact to make sure that all taxation and employment reporting is up to date.
The definitive step in the dissolution process is to file the certificate of dissolution with the Alaska Secretary of State. You can fill out the Articles of Dissolution PDF, download the completed from, sign it, and mail it to the address listed on the form. You can also file online at the Corporations section of the Alaska Commerce website.
The fee is $25, payable by check, money order, or credit card..
2. You must list a reason, a dissolution effective date, and any other information that you or your fellow members deem appropriate.
3. The form must be signed by a member or manager of record or by an attorney-in-fact.
4. Whoever fills out the form must enter their name, sign the form, and fill in the date and time.
5. You must name a contact for questions or problems and give their contact information.
6. You must provide a name and address for the return of your filed documents.
LLC dissolution in Alaska is similar to dissolution in other states. There are no special requirements to make Alaska dissolution more challenging. Once your certificate of dissolution is processed, and you’ve completed all the windup tasks, your LLC no longer exists as an active Alaska business entity.
Even if you dissolved your LLC for entirely positive reason, it can be somewhat sad to let go of something that was important to you. You might take a moment to stop and congratulate yourself on having taken a risk, started a business, and poured your best effort into it. The experience will be of great value to you in whatever comes next.
There are many reasons for dissolving an LLC. Some are difficult and others more positive. These might include:
Lack of financial success or poor cash flow.
Internal disagreements and disputes between members.
A trigger event such as the death or incapacitation of a member.
Moving your LLC to another state or merging it with another business.
Retirement.
The desire to leave this line of business and move on to something new.
It costs $25 to file an LLC certificate of dissolution in Alaska.
You can fill out the Certificate of Dissolution PDF and mail it in, or you can file online at the Alaska commerce website.
It can take up to 10 to 15 business days for the Division of Corporations to process your Certificate of Dissolution. The entire dissolution, from the decision to dissolve through all the windup tasks, can take several weeks to several months.
If your LLC stops doing business but does not formally dissolve, the State of Alaska will continue to expect biennial reports and any fee payment. You may accumulate penalties and fines. Also, an incompletely dissolved LLC may subject you to the personal liability that an LLC normally shields you from.
You will need to file dissolution papers in every state where your LLC is registered. You will need to finalize tax and employment filings and payments in all those states.
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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