It was a lot of work to put together your Limited Liability Company (LLC) but the time may come when you need to dissolve it. While there are general rules to follow for dissolving your LLC, each state has its own specific requirements that must be met to ensure that your dissolution is done correctly.
If you own an LLC in North Dakota, this article will provide you with some reasons why you may want to dissolve it and explain some steps you need to take that will help you meet the North Dakota business dissolution requirements.
When you dissolve your LLC, you are removing your LLC’s independent legal status from North Dakota’s registry. You are canceling it with the North Dakota Secretary of State. You can do this voluntarily. Under some circumstances, discussed later in this article, you may be forced to involuntarily dissolve your LLC.
Basically, for your dissolution application to be accepted by North Dakota, you must notify all your business creditors that the LLC will no longer exist and pay any outstanding debts. You must also provide notice to applicable local, state, and federal agencies.
You must file a Certificate of Account Status with the state verifying you have made all the appropriate notifications, paid all outstanding debts and taxes, and that your LLC is in good standing.
There are three types of dissolutions. Each type has its own procedural requirements.
This is when the state removes the power, rights, and authority of your LLC because you failed to comply with the state’s LLC obligations. Some examples of these failures include:
You may not even be aware of these failures and continue operating your business. If this happens, you lose all the legal protection your LLC offers you since it will be considered dissolved.
Pay close attention to be sure you follow all the LLC legal requirements imposed by the North Dakota office of the Secretary of State so this does not happen to your LLC.
A judicial dissolution is when there has been a legal process resulting in a court order to dissolve the LLC. This can happen when:
It takes time, work, and diligence to dissolve your North Dakota LLC. When you formed your LLC, you filed an Operating Agreement with the Secretary of State. That Agreement outlines the procedures you take when the decision to dissolve is made.
An overview of the requirements for dissolving your LLC in North Dakota includes:
Take the following steps to dissolve your North Dakota LLC.
The members must vote on whether to dissolve the LLC. The meaning of the vote depends on whether the LLC is a single or multi-member entity.
A single member LLC can be dissolved based on the decision of the single member. In a multi-member LLC, the majority must vote to dissolve the LLC for dissolution to occur. The votes are recorded in the minutes of the meeting or on a consent form.
The dissolution clause set forth in your LLC operating agreement governs the dissolution process. This may include how assets are divided, the process for canceling contracts, handling debts, and dividing assets.
After the vote for dissolution is recorded, a formal date for the dissolution is set. The LLC assets should then be accounted for and divided among the stakeholders and members.
The final step is to notify all the creditors so the debts can be settled.
North Dakota LLCs must file a Beneficial Ownership Information (BOI) report with the Financial Crimes Enforcement Network (FinCIN). This report identifies all those who have at least a 25% ownership in the business or who exert some control over its activities.
An up-to-date BOI report must be submitted to FInCIN before you can go forward with the dissolution process.
As part of the dissolution process, you will be winding up all aspects of your business operations. Some specific winding up tasks include:
All creditors and claimants must be notified of the dissolution. Any debts your business has, whether credit card debt or bank loans, must be paid before the dissolution can be finalized.
If assets remain after all debts and taxes are paid, they are distributed among the members.
You are required to contact all government agencies, local, state, and federal, and pay all outstanding taxes by the date you plan to dissolve your LLC. Some of these taxes are:
North Dakota does not require you to obtain a tax clearance certificate in order to dissolve your LLC. If your LLC has filed federal taxes, then you must use the final return option on your IRS form in lieu of obtaining a tax clearance certificate.
Just as you were required to file Articles of Organization with the North Dakota Secretary of State when you created your LLC, you must file Articles of Dissolution on a form provided by the state. There is a $20 filing fee.
You can fill the form out online and submit it with your credit card information. You can also download the form, fill it out, and take it in person to the North Dakota Secretary of State physical office along with the filing fee.
Before you lock the door to your business, go over your checklist to be sure you are ready to say goodbye:
There are many reasons. Some of the most common ones are:
After the LLC has paid all debts and taxes, there is a $20 fee for filing Articles of Dissolution.
Yes. You can fill out the form for Articles of Dissolution online and submit it along with your credit card information for the $20 filing fee.
The vote to dissolve the LLC can be done quickly, but the amount of time it takes to dissolve your LLC after the majority of members have voted to dissolve depends on many factors. Assets need to be sold, debts, including taxes, must be paid, contracts need to be terminated, business licenses and permits canceled, and more. Winding up your LLC could take anywhere from days to months.
Until you dissolve your LLC, you must comply with all rules applicable to LLCs. This means you will still need to pay taxes, keep licensing and permits up to date, file annual reports, and meet all other LLC requirements even if you are not doing any business. If you ignore these obligations, and are not in compliance, you may be assessed a penalty along with other fees.
You can register your business and form an LLC in more than one state. Just remember that each state has its own requirements for forming an LLC and filing fees also vary by state. You must comply with all state laws and filing fees for each individual state where you plan to do business.
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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