Dissolution of a Florida Limited Liability Company Checklist
The process to wrap up a Florida Limited Liability Company (LLC) can often times be more complicated than the steps taken to create it. When an owner of a Florida LLC determines, either voluntarily or involuntarily, that the business can no longer carry-on then the dissolution process begins.
Causes of Dissolution of Florida Limited Liability Company
Dissolution of a company refers to the formal winding up of operations and liquidation of assets prior to permanently shutting down a business.
There are several reasons why an owner of a Florida Limited Liability Company would choose to dissolve the company. Florida Statute § 605.0701 enumerates the following occurrences that would prompt the dissolution of an LLC. They are:
- An event or occurrence that the company’s operating agreement states would cause the dissolution (i.e. death or bankruptcy of an owner),
- The voluntary consent of all owners,
- The passage of ninety consecutive days in which the LLC has no members (with certain exceptions),
- The entry of a judicial order dissolving the company, or
- The filing of a statement of administrative dissolution by the Florida Department of State (usually for failure to file annual report and pay filing fees).
Process of Dissolution of Florida LLC
If dissolution is triggered by any of these occurrences, the winding-up process commences. The following provides a general overview of the various steps required to voluntarily dissolve a Florida LLC:
- Marshal and Apply Assets to Discharge Obligations to Creditors– The LLC must apply its assets to discharge its obligations to creditors, including members who are creditors.
- Deliver Written Notice of Dissolution to Each Known Claimant – This notice must provide a reasonable description of the claim, the amount that is admitted, any interest obligation, a mailing address to which a claim may be sent, as well as, a deadline by which confirmation of the claim must be delivered to the dissolved LLC.
- Provide Notice to Unknown Claimants – This process is governed by Stat. § 605.0712(b). It requires that: (a) the owner file a Notice of Dissolution and request that anyone who has a claim against the company present them in accordance with such notice, or (b) the owner publish a Notice of Dissolution and request that anyone who has a claim against the company presents them in accordance with such notice.
- Pay distributions that may be owed to members and/or former members – Any LLC in the process of winding up must distribute unreturned distributions to every person owning a transferable interest made up of contributions previously made to the company but not returned.
- Distribute remaining assets – Any remaining assets must be distributed to members and/or former members in the same proportion in which they shared distributions prior to dissolution.
- If applicable, cancel registration in foreign jurisdictions – A dissolved Florida LLC must also withdraw from all other states in which it is registered to do business. This may require hiring an attorney in the various jurisdictions in which the LLC is registered to assist with submitting the appropriate forms and payment of any fees, closing accounts, filing final tax returns and paying any taxes that may be due in the particular jurisdiction.
- File final tax returns with the Internal Revenue Service – Each type of LLC would require different tax filings. For example, an LLC classified as a partnership must file a different tax return (IRS Form 1065) than an LLC classified as a corporation (IRS Form 1120 or Form 1120S). Further, LLCs classified as a corporation must file additional forms to report the dissolution of the company with the IRS.
- File any returns for any county, municipal or other local government taxes – However, Florida LLCs that are considering dissolution do not need to obtain a tax clearance certification or letter or otherwise notify the Florida Department of Revenue prior to dissolution.
- Submit the Articles of Dissolution, along with the appropriate fee ($25), to the Florida Department of State in accordance with Stat. § 605.0707 – These Articles must be accompanied by a cover letter containing specific language. After they are filed, a letter of acknowledgment and certificate of dissolution will be issued.
After making sure each applicable step is satisfied, prior owners of a dissolved LLC can rest assured that the risk of unforeseen creditors or claims of unpaid distributions is minimized.
A qualified attorney can assist with making sure that your Florida Limited Liability Company is property wound up and all loose ends are taken care of prior to taking the final step of filing the Articles of Dissolution with the state of Florida.
Contact us to learn how ASR Law Firm can assist you with dissolving your Florida LLC.