Closing up shop is rarely easy, even when you know it’s the right call. You’ve invested your time, money, and energy into building your North Carolina LLC. But for one reason or another – retirement, seeking new ventures, financial issues – it becomes clear it’s time to move on.
Once you’ve made the bittersweet decision to dissolve your LLC, it’s crucial to complete the process properly. This ensures you tie up all loose ends and gain protection from future business liabilities.
This comprehensive guide will walk you through everything you need to know to officially dissolve your LLC in North Carolina.
Before jumping into the steps, let’s quickly cover why formally dissolving your LLC is so important.
When you formed your LLC, the state recognized it as a legal business entity separate from its owners. Dissolving the LLC formally ends its existence in the eyes of the law.
Until you complete the dissolution process, your LLC remains legally active. This means you’ll still owe annual reports, franchise taxes, and other compliance responsibilities.
Dissolving also completes your LLC’s “winding up” period. This gives you time to settle debts, distribute assets, and wrap up business operations. Rushing through dissolution can leave you open to lawsuits or tax penalties.
Most importantly, proper dissolution provides legal protection for LLC owners (aka members). Once dissolved, members gain immunity from personal liability for future company debts and claims.
So while dissolution signals the end of your LLC, it also grants you freedom to move on. With that said, let’s get into how to close your North Carolina LLC for good.
Dissolving an LLC in North Carolina involves five essential steps:
We’ll explore each of these steps in detail later in this guide. First, let’s look at the basics of LLC dissolution and what drives the process. Grasping these fundamentals will help the NC-specific requirements make more sense.
Before diving into the North Carolina details, it’s helpful to understand LLC dissolution more broadly. This background gives important context about the dissolution process and why it’s required.
LLC dissolution legally terminates a limited liability company’s existence. It typically occurs when the LLC’s members vote to close the company’s operations.
The dissolution process involves “winding up” the LLC’s affairs. This includes:
Once dissolved, the LLC ceases to exist as a legal business entity. This releases the owners from potential future liability.
However, owners can still be sued for conduct that occurred before the dissolution. Properly tying up loose ends helps minimize this risk.
LLC dissolutions generally fall under one of three categories:
Administrative dissolution occurs when an LLC fails to comply with state requirements, such as filing annual reports or paying taxes. After giving notice, the state administratively dissolves the non-compliant LLC.
Judicial dissolution takes place when a court orders an LLC to dissolve. This typically results from irreconcilable disputes between the LLC’s owners or managers. Members, managers, or creditors can petition a judge to judicially dissolve the company if they can prove it’s dysfunctional and unable to operate properly.
Voluntary dissolution happens when an LLC’s owners decide to dissolve the company. The members vote to close the LLC and proceed to wind up business operations. This is the most common type of LLC dissolution.
Now that you understand the basics, let’s look specifically at how to voluntarily dissolve an LLC in North Carolina.
Voluntarily dissolving an LLC in NC involves working through several important steps:
The first step is voting to approve dissolving your North Carolina LLC. How this vote occurs depends on your management structure:
Single-member LLCs: If you’re the sole member, you can independently decide to dissolve your LLC.
Multi-member LLCs: For LLCs with multiple members, you must hold a dissolution vote. Your operating agreement likely specifies voting requirements, such as a simple majority. If not stated, approval from over 50% of members is generally sufficient.
Before voting, carefully review your operating agreement’s dissolution provisions. Some require unanimous consent from all members to dissolve. Understanding these rules ensures your vote proceeds legally.
If your operating agreement is silent on dissolution, North Carolina law doesn’t specify any additional voting formalities. Just document your vote in writing, whether through meeting minutes or a membership resolution.
With the vote approved, your LLC enters its wind-up period to complete unfinished business matters. Use this time to:
Create a wind-up checklist to ensure no tasks fall through the cracks. Thoroughly tying up loose ends now prevents headaches later. This also helps limit owners’ liability after dissolution.
North Carolina law requires dissolving LLCs to notify known creditors and claimants who may have grievances against the company.
Review your financial records and account for anyone you owe money or other obligations. Send official written notice of your LLC’s dissolution at least 120 days before filing articles with the state.
You must also make reasonable provisions to pay any remaining valid claims against the LLC. Settling debts now provides protection from future liability. Don’t distribute remaining assets to members until creditors are paid.
Another important wind-up task is settling final federal, state, and local tax obligations:
Double check all agencies to confirm your tax obligations are met. This shields you from successor liability for taxes owed by the dissolved LLC.
The final step is filing articles of dissolution with the North Carolina Secretary of State to legally terminate your LLC:
NC Department of the Secretary of State
Corporations Division
PO Box 29525
Raleigh, NC 27626-0525
You can also file the articles in-person at the Raleigh or Charlotte walk-in offices.
Once your articles are processed, the state will issue a certificate of dissolution. This serves as legal proof that your LLC no longer exists. Make sure to notify your registered agent that dissolution is complete so they can terminate their services.
With these five steps finished, congratulations – you’ve officially dissolved your North Carolina LLC!
Dissolving your LLC with the state is just the beginning of the end. Here are some remaining post-dissolution tasks to tie up loose ends:
With the business fully closed down, you can now focus your energies on new ventures ahead!
Ending your North Carolina LLC requires methodically addressing the dissolution process and post-dissolution tasks. While winding things up takes time, completing these steps properly provides peace of mind.
Rushing through dissolution often leaves issues unresolved, exposing members to unnecessary liability. Carefully work through each requirement and tie up remaining loose ends.
This protects members from future claims and allows everyone to fully move on from the business. Taking this slow but strategic approach ensures you dissolve your North Carolina LLC the right way.
You’ve worked hard building your company. Conclude it with the same level of care and diligence. If any questions arise during dissolution, don’t hesitate to contact a North Carolina business attorney.
Best of luck closing this chapter and pursuing new entrepreneurial horizons ahead!
North Carolina charges a $30 filing fee to dissolve an LLC. You may also owe remaining annual report fees and taxes for the year you dissolve
Yes, you can complete the Secretary of State's articles of dissolution form online to legally terminate your LLC. You can also download printable forms to mail in.
Officially dissolving with the state only takes about 1-2 weeks after filing your articles. However, properly winding up business operations can take several months prior to submitting the articles.
If you don't properly dissolve, your LLC remains legally active on state records. This means you'll still owe annual reports, taxes, and fees. Failing to file these can lead to administrative dissolution.
Yes, if operating in multiple states, you must dissolve your LLC separately in each one by filing individual articles with the respective Secretary of State office.
North Carolina does allow LLCs to rescind dissolution as long as the Secretary of State still needs to complete processing the articles of dissolution.
You must submit IRS Form 966 to notify the IRS that you are closing your EIN as part of dissolving your LLC. This terminates your EIN once dissolution is complete.
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.
Products
Resources
@2024 Copyright Tailor Brands