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How to Dissolve an LLC in Montana

The members of a limited liability company (LLC) in Montana may decide that the business has served its purpose, and it is time to wind it down and move on. To do this, they will need to dissolve the business entity. Business dissolution may occur because the business is doing poorly or as the result of bankruptcy. It can also result from action by a court or state agency. Whatever the reason, members should be aware of how to dissolve an LLC. The exact process may depend on the terms of an LLC’s operating agreement.

If you have an LLC in Montana, this article will help you understand how you could dissolve it.

Basics of LLC Dissolution

Dissolving an LLC ends its existence as a distinct legal entity. This means that you will no longer be subject to fees or filing requirements to maintain the LLC’s existence.

It also means, however, that you cannot do business through the LLC anymore, and it cannot protect you from personal liability for business activities. Unless you have sought trademark protection for your business name, it also means that others will be able to use that name for another Montana business.

Types of LLC Dissolution

Dissolutions fall into three main categories: administrative, judicial, and voluntary. Administrative and judicial dissolution may also be known as involuntary dissolution since they can occur without the members’ agreement.

Administrative dissolution

Administrative dissolution occurs when the Secretary of State finds that the LLC has failed to fulfill its obligations as a Montana business entity. This includes the following:

  • Failing to appoint a registered agent in Montana for 60 days;
  • Failing to file a notice with the Secretary of State within 60 days of changing its registered agent;
  • Failing to file an annual report within 140 days after the due date; and
  • Failing to pay required fees to the Secretary of State.

The Secretary of State’s office publishes a list of LLCs that are in default of their obligations every year on September 1. It also notifies each defaulting company in a letter addressed to their registered agent. It may order the administrative dissolution of an LLC 90 days after it gives notice. The members of the LLC may ask the Montana Secretary of State to reinstate the LLC for up to 5 years after the date of administrative dissolution.

Judicial dissolution

More serious misconduct by an LLC can result in dissolution by court order, known as judicial dissolution. The Secretary of State may seek judicial dissolution based on the following allegations:

  • The LLC used fraud to obtain its certificate of existence; or
  • It exceeded or abused its legal authority, and continued such activities after receiving written notice from the Secretary of State.

A member of an LLC may petition for judicial dissolution on various grounds, including the following:

  • It is likely that the company’s “economic purpose” will be “unreasonably frustrated”; or
  • The controlling members or managers have engaged in acts that are “illegal, oppressive, fraudulent, or unfairly prejudicial” to the member.

A court can order the dissolution of the LLC, or it can terminate individual members from the company.

Voluntary dissolution

An LLC’s members can voluntarily dissolve the business if they follow the procedures outlined in their operating agreement. This typically involves giving notice to all members of a meeting where dissolution will be on the agenda, followed by a vote. An operating agreement may allow dissolution if a simple majority votes in favor, or it may require something more, like a two-thirds vote for dissolution.

Dissolving Your LLC in Montana

The following steps allow you to dissolve a Montana LLC.

Step 1: Vote to dissolve the LLC

The LLC’s operating agreement should outline procedures for holding a member meeting to discuss and vote on dissolution. It should also address the process of winding up the business, such as settling debts, canceling contracts, and distributing assets among the members.

Single vs. multi-member LLC dissolution

A single-member LLC does not need to hold a meeting to debate dissolution since it only has one member with one vote. This does not mean that the process is significantly simpler. Even a single-member LLC should carefully document the decision to dissolve the business, as well as the winding-up process.

Dissolution rules in your LLC operating agreement

The dissolution clause in your LLC operating agreement governs the process for winding up and dissolving the business. If your LLC does not have an operating agreement, or if the agreement is silent on these issues, state law governs the dissolution process.

Montana-Specific Rules for Voting to Dissolve Your LLC

Unless an LLC’s operating agreement states otherwise, voluntary dissolution requires the agreement of all members.

Step 2: Wind up all business affairs and handle any other business matters

The winding-up process follows the members’ vote in favor of dissolution. This can take some time, depending on the size and complexity of the business. It includes:

  • Notifying vendors, customers, and others that you are shutting down the business;
  • Informing your registered agent of the dissolution;
  • Canceling business licenses and permits;
  • Terminating leases and other contracts;
  • Addressing employment issues, including payment of payroll taxes;
  • Settling or paying off business debts;
  • Liquidating business assets;
  • Filing final tax returns; and
  • Closing business bank accounts.

Step 3: Notify creditors and claimants about your LLC's dissolution, settle existing debts, and distribute remaining assets

You must notify the LLC’s creditors and other claimants about the dissolution. You must pay off business loans, credit card debt, and other liabilities before completing the LLC dissolution.

Step 4: Notify Tax Agencies and settle remaining taxes

You must file final federal and state tax returns. In addition to income tax, this may include payroll tax, sales tax, and other taxes.

Montana does not require an LLC to obtain a tax clearance letter to dissolve the business entity. You might, however, be required to file a Beneficial Ownership Information (BOI) report with the Financial Crimes Enforcement Network (FinCEN). A federal law that took effect in 2024, the Corporate Transparency Act, requires many businesses to file this information every year. If it applies to your business, you must file a report before finalizing the dissolution.

Step 5: File articles of termination with the Secretary of State

The Montana Secretary of State handles most filings online through its web portal. Once you have completed the winding-up process, you may file Articles Of Termination. This requires the following information:

  • The name of the LLC;
  • The reason for dissolving the business;
  • The date the termination will be effective, which can be a specific future date or the date the Secretary of State files the document;
  • The name(s) of the agent(s) who may receive service of process for the LLC after termination;
  • The name(s) of the person(s) authorized to handle the winding-up process and sign documents on the LLC’s behalf;
  • The LLC’s dissolution date; which can be earlier than the termination date; and
  • A statement declaring that the company has wound up its business and ceased its existence.

The termination becomes effective on the date provided in the Articles of Termination. All winding up should be complete by that date.

There is no filing fee for Articles of Termination. You can pay for expedited service:

  • One-day service: $20
  • One-hour service: $100

Conclusion

Once you have dissolved and terminated the LLC, you may still receive correspondence addressed to it. You may receive claims against the business, which can be difficult to resolve if you have disposed of or distributed all business assets.

FAQ

LLC dissolution may be necessary for a variety of reasons. The Articles of Organization might state that the LLC will dissolve on a specific date. They might require dissolution upon the occurrence of certain events, such as the death of a member. In those situations, the members have no choice but to dissolve the business.

Reasons members may choose voluntary dissolution include the following:

  • Discharge from a bankruptcy proceeding;
  • Business downturn that did not result in bankruptcy but still made dissolution preferable to continuing the business;
  • Completion of the business purpose, such as if an LLC was created for a specific project or venture;
  • Discord among the members; or
  • An amicable decision to close the business and move on to whatever comes next.

The Montana Secretary of State does not charge a filing fee for Articles of Termination. The cost of winding up the business depends on your LLC’s circumstances.

You can file the Articles of Termination through the Montana Secretary of State’s web portal.

The winding-up process could take weeks or months, depending on the size of your business. Once you are ready to file the Articles of Termination, you only need to wait as long as it takes for the Secretary of State to issue a Certificate of Termination. You can cut this time to a day or an hour if you pay an expedited service fee.

If you cease running a business through your LLC but do not dissolve the entity, you will still be obligated to pay fees and file reports. You could face fines and other penalties if you do not keep up with these obligations.

Every state has procedures for withdrawing or canceling the registration of a foreign LLC. You must follow the procedures of each state in which you registered.

Related LLC articles

Learn more about LLC in Montana

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Terry OToole

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.

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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