Closing your limited liability company (LLC) can be bittersweet, possibly with more bitterness or sweetness depending on why you’re closing. Whatever the reason for closing is, it’s important to follow the process of officially dissolving your LLC.
Here’s how to dissolve an LLC in Utah. Following these steps will help you avoid additional fees and liabilities that could arise if you don’t officially end registration with the state.
Dissolving an LLC legally signifies the formal termination of its operations, and of its status as a recognized business entity in Utah. There are several steps required if you need to dissolve your LLC.
There are several types of LLC dissolution, each of which is triggered by a different entity.
An administrative dissolution is initiated by the state and involuntary. This is most often for failure to meet ongoing LLC requirements, such as not filing an annual report and paying the $18 fee. Failing to maintain a registered agent within the state could also result in an administrative dissolution.
If the state is pursuing an administrative dissolution of your LLC, the registered agent will receive a mailed notice from the Utah Division of Corporations and Commercial Code. You usually then have 60 days to correct the error(s), after which the state will likely proceed with the dissolution if those errors aren’t corrected. The full process for a Utah LLC administrative dissolution is legislated by Utah Code 16-10a-1421.
(It’s required that your LLC has a registered agent physically located within Utah. If you’re the registered agent but moving out of state, use a registered agent service to keep a registered agent within the state.)
A judicial dissolution happens when a court orders the dissolution of the LLC. This may be due to lawsuits by members, significant disagreements among members that prevent the LLC’s operation, or illegal/unethical activities by the LLC. Sometimes it’s a state or federal agency that sues for a judicial dissolution because of regulatory violations.
When a judge grants orders a judicial dissolution, the court oversees the process of closing the LLC.
The most straightforward and common form of dissolution is a voluntary one. This is when the LLC members choose to dissolve the business. Members must vote to close the LLC, adhering to any operating agreement and state law. The laws governing voluntary dissolution of a Utah LLC are found in.
Voluntary dissolution is the most common way for business owners to close an LLC in Utah. The steps listed below are primarily for a voluntary dissolution of your Utah LLC.
A voluntary dissolution begins with the LLC members voting to end the business. This is just you deciding to close the business if you’re the sole member (owner). It requires a vote of the members if you have a multi-member LLC with several stakeholders.
An operating agreement is a document that governs much of your LLC, including dissolution. An agreement is strongly recommended, although not required by Utah law.
If your LLC has a written operating agreement in place, dissolution must follow the process set forth in the agreement. If there’s not an operating agreement, then the dissolution process needs to follow the process set forth in Utah Code Part 14. Of course, any operating agreement also must adhere to the law.
Once a vote is passed, a formal notice of dissolution should be filed with the Utah State Department of Commerce to notify the state of your intention to dissolve. There is an official dissolution notice form to file with the Division of Corporations & Commercial Code.
In addition to notifying the state that your LLC is ending, there are several other parties to notify:
You’ll need to notify all creditors with whom your business has outstanding debts. Send written notice to your business’s creditors, and include how they can submit a claim to collect the outstanding amount owed.
Depending on what debts your business has, you might need to pay off credit card balances, commercial mortgages, commercial auto leases or loans, business loans, or other outstanding debts. Creditors generally have priority over members when liquidating assets and distributing funds.
Attend to any outstanding business tax obligations, including both federal and state ones. You may need to file and pay/remit payroll taxes, property taxes, collected sales tax, or other tax obligations.
You don’t need a Tax Clearance to dissolve an LLC that’s based in Utah, but you will need one if your LLC is “foreign” (out of state). If needed, this can be requested from the Utah Department of Commerce, Division of Corporations.
This doesn’t include personal income tax that you may owe as a result of earning through the LLC. If you financially operate as a sole proprietor, you should pay income tax like you normally would. It generally should be paid through quarterly estimated self-employment tax payments and your annual 1040 filing.
To legally end your LLC in Utah, file articles of dissolution with the Utah State Department of Commerce. This document formalizes the cessation of your business.
The Statement of Dissolution is a simple one-page form. You’ll need to provide your LLC’s name, LLC’s entity number, effective date (when filed or a future date), a confirmation that the person signing is authorized to, and your name, date and signature.
The certificate of dissolution can be mailed to the Utah Department of Commerce, Division of Corporations, PO Box 146705, Salt Lake City Utah 84114-6705. Alternatively, the form can be brought in person to 160 East 300 South (or 160 E Broadway), Salt Lake City Utah 84111.
There is no fee to file the certificate of dissolution for an in-state LLC. The Division of Corporations has a comprehensive list of business filing fees.
(Both tax matters and business dissolution are handled by the Utah Department of Commerce, rather than the Utah Department of State.)
Make sure you complete all of the steps required for dissolution if your LLC must close. The process for LLC dissolution in Utah is straightforward, but it’s important to correctly complete each step. This is how you can ensure your LLC’s financial and legal liabilities are taken care, and that you’re no longer registered as operating within the state.
Dissolving your LLC legally ends your business obligations in Utah, and helps avoid ongoing annual fees or potential future liabilities.
How Much Does It Cost to Dissolve an LLC in Utah?
There is no fee for filing a Statement of Dissolution. You can dissolve an LLC in Utah for free.
No, there’s not an option to file a certificate of termination online. The form must be completed on a computer (not handwritten), and then printed. It gets mailed to Division of Corporations, PO Box 146705, Salt Lake City Utah 84114-6705.
The normal processing time is 5-7 days after the Division of Corporations receives your Statement of Dissolution. Expedited Service guarantees 2-day processing, but this costs $75 and usually isn’t needed when dissolving a business.
Other businesses can’t immediately use your LLC’s name once you end it. In a voluntary dissolution, Utah will keep your business’s name reserved for 120 days. This is after the date of dissolution, whether that’s when the form is filed or some future stated date. In an administrative or judicial dissolution, the business name will be reserved for 2 years.
Failure to dissolve your LLC can lead to ongoing fees, penalties, and potential legal issues. Your business will still be responsible for filing an annual report and paying Utah’s $18 annual LLC fee. Your business could also face future tax liabilities or lawsuits.
If your LLC is registered in multiple states, you must file for dissolution in each of those states according to their specific procedures to properly close your business everywhere it operates.
An LLC that’s primarily in another state but operates in Utah is considered a “foreign” LLC. In this case, a Tax Clearance from the state’s Division of Corporations is needed, before the Statement of Dissolution can be filed. There’s still no fee for filing the dissolution statement.
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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