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Shutting down limited liability companies in Arizona is subject to Federal law rules and involves a series of steps to cover. The LLC operates under the State of Arizona. Ending business operations within a state cataloged entity and releasing it from creditors and defendants is a serious matter. We’ve stated the process in detail.
As a business owner, if you no longer wish to operate the LLC, there are some legal formalities to fulfill. Make sure to make the following arrangements.
In most cases, the company’s certificate of formation or operating agreement states the rules to dissolve an LLC. Generally, the rules require all members to vote in agreement to terminate the entity. To carry out the procedure smoothly, inform the members in advance and set a specific time for the meeting and votes.
The Arizona LLC Act allows for an alternative method to dissolve an LLC unless stated otherwise in the operating agreement. This method involves getting written consent from business partners. Written approvals for the termination of the LLC are a mandatory requirement if more than one member shares the company ownership This formality is void if the venture has a sole owner or is a husband-wife-owned business.
Also, one or more of the partners gets ownership of assets valued at more than one-half of the assets distributed among other partners upon dissolution which can be determined by a judge of probate.
Whichever approach you choose to go with, remember to document the minutes of the meeting or have a written consent signed by the attendees. Arizona State LLC rules do not require owners to publish dissolution in newspapers.
After dissolution, the only thing that remains is to wind up what’s left of the LLC. It may sound easy, but it is a tiring process. It is better to assign the winding up tasks to one or more members. It consists of three main steps:
Apart from the above, other smaller tasks differ according to companies, but are just as important:
Although the state of Arizona does not obligate you to acquire tax clearance before dissolving the LLC, it is essential to consult a professional federal income tax advisor if the LLC is categorized as a partnership entity (IRS Form 1065) or as a corporation (IRS Form 1120). You want to make sure there are no adverse tax consequences.
If all is well, mark the “final return” check box on your last federal income tax return form.
If the LLC is registered to conduct business in states other than Arizona, those establishments must be dissolved before termination of the primary domestic entity.
You will need to file separate applications for withdrawal for each state due to the particular rules carried out by the state. The forms can have various names such as application of withdrawal, termination of registration, certificate or right to surrender to transact business or certificate of dissolution. Please note that some claims may require a filing fee.
Failing to comply with this process will entitle you to pay minimum taxes within the state and hold you liable for annual reports.
After the dissolution and winding up (including distribution of assets) of the LLC, you’ll need to submit an Articles of Dissolution file to the Arizona Corporation Commission (ACC). The file consists of the following information:
The Articles of Dissolution form contains a space to mention whether the signee is a manager, a partner, or someone signing on either behalf. The form and instructions are available for download on the ACC website. Accompany the form with a cover sheet (required) also available on the ACC website. Be sure to keep copies for your records.
The cost of submitting an Articles of Dissolution to the ACC is $35. It usually takes 20 days for the file to process. It is a good idea to pay an additional $35 for expedited processing. You can submit the form via email, fax, or online.
To save yourself from any hustle, make sure to follow all the steps and procedures within the provided time, especially when it involves outsiders. It takes a heavy heart to bring down a business venture, but when there’s no other way to keep it standing, dissolution is the only feasible solution.
The Incorporation Academy is run by a group of entrepreneurs who know the difficulties of starting and running a business. We are dedicated to helping businesses get started correctly and run more efficiently.