Starting a Virginia LLC is one of the best decisions that a person can probably make if he wants to start his business, but there are some situations in which either the person is unable to handle his business or want to shut it down. In such conditions, the business entity has to dissolve its LLC officially. Now to dissolve the LLC, one needs to go through three essential steps, much fewer than the steps of going through the process of how to start an LLC.
A compliant dissolution involves following the operating agreement created upon formation of the LLC, closing tax accounts, and filing the articles for dissolution. But before this, most people wonder why do they need to dissolve their LLC. If you also have any such questions and want to know in detail the process of dissolving your firm, then you should read the following.
On this page, you’ll learn about the following:
- How to Dissolve an LLC in Virginia
- Other Things to Note When Dissolving Your LLC
- Why Dissolve Virginia LLC?
- Virginia LLC Dissolution Review
How to Dissolve an LLC in Virginia
There comes a time when a business has to cease operation for some reason. As such, it is necessarily to do the closure property by filling a dissolution with the states. Here are the steps:
Step 1: Use Virginia LLC Operating Agreement As Guide
When you, as a business entity, have started an LLC, then there is an operating agreement that is formed. In that operating agreement, there are complete details of how the company will function and grow, which acts as a comprehensive guide. But there is a process of dissolution also, which is added to your agreement by the best LLC service that you must have chosen. The common steps that almost every LLC follows are:-
First of all, there will be voting among the members of the LLC for dissolving in the dissolution meeting. If the majority is with the YES, then the process goes into legal proceedings.
- All the dissolution votes will be noted down and recorded with the minutes of the meeting or a consent form.
- After that, a formal date of dissolving the LLC will be decided.
- The next step is counting of the asset that is available in LLC and dividing it among the stakeholders and members accordingly.
- After that, the creditors of the business are notified, and the debts of the business are settled.
This is a general process, however, it is strongly recommended to seek professional help to avoid any complications when it comes to terminate an LLC. Following are the top 5 best LLC service providers in the USA. All of these below-mentioned services not only help you to form your LLC but also will guide you through to dissolve it.
Step 2: Close Tax Accounts
Every action that an official business takes is legally bound to some minimum business taxes, and for that, various accounts are maintained by the state government with the help of various departments. You should consider all the taxes that you have paid for the duration of operation of your LLC and make a list of them.
Then, you must contact all of the government entities and clear the amount of tax that is due until the date that you have decided for dissolution. All the taxes must be paid in advance so that you don’t face any issues in the further process of shutting down your LLC.
Some of the common taxes that limited liability companies have to pay are:
- unemployment insurance tax.
- employee withholding tax if the LLC has or had employees in their LLC.
- if LLC uses to sell taxable goods then they are also liable to pay the sales and use tax.
Most of these taxes are normally filed, but there are some departments that require official paperwork, without which it is impossible for the business to close accounts. That is why it is advisable for the LLC owner to go through the sales tax guide and hire an accounting service. If you want to do the accounting yourself or if you simply just want to make accounting easy, here are some useful tools.
Step 3: File Articles of Dissolution
There is a list of voluntary forms that you, as an LLC owner, have to file. Once these articles are filed, the legal existence of the LLC will be over. The process of filing the articles is very easy and is discussed below.
- First of all, the person has to jump into the Secretary of State Website of Virginia state.
- In that particular SOS website, the LLC owner has to look for the Domestic LLC Articles of Dissolution page.
- On this page, there is a form available which is basically the article of dissolution you are looking for. You have to download that pdf form and start filling it.
- In the form, all the important and legal information are required to be filled that is why you should be extra careful.
- After filling in all the important information, you must choose the mode of payment that you want to use for paying the fees of the LLC dissolution.
- After filling in every detail, one should submit the form through email and make a payment.
Now, the LLC you owned is dissolved, and you are free from all the liabilities linked with the LLC and its taxes. A copy of both original articles and recorded articles should be submitted in front of the probate judge. Now it’s his call that he accepts your expedited dissolutions or not.
Other Things to Note When Dissolving Your LLC
After the dissolution processes, there are some other chores that the owners of LLC need to take care of. These are as important as the process of actual dissolution. Otherwise, the name and fame earned by LLC may be ruined within seconds. Most of these processes include tasks related to the monetary division of assets and clearing every past record both legally and monetarily.
There are some purposes of LLC that require some attention even after dissolution, known as winding up. The task of winding up includes.
- For a period of time, the property of business requires preservation.
- If there is any civil case against the LLC, then one needs to prosecute them.
- Winding up includes settling all the disputes of LLC.
- Transferring of all the property of LLC to the names of partners.
- Discharging of all the liabilities that the LLC owes to others.
- Proper distribution of all the assets into members according to their percentage of partnerships.
If you are dissolving your LLC in Virginia, then you are not required to obtain any sort of tax clearance. Your task of dissolution will complete even without your tax clearances. But if you are filing the federal taxes, then you should go through the final return box in your IRS form.
The IRS form for the LLC that are classified as partnerships is 1065, and those LLC’s who have registered themselves as corporate should check IRS form number 1120.
Cost of Dissolving LLC
If you want to dissolve the LLC that is registered with Virginia, then there is a fixed cost that you have to bear. The fees charged by the government are $25, the details which are mentioned on the second page of the articles dissolution filing form. You are given plenty of choices to make this payment.
- You can select a payment pick-up option.
- There is an option of direct account transfer through your prepaid accounts.
- LLC owners can also use their Credit card, providing its complete details and types. Along with that, an original signature is required to authorize the transaction state will make.
Why Dissolve Virginia LLC?
Dissolving an LLC is not a difficult task if the person does it adequately. When someone dissolves their company, they are declaring their company inactive and out of operation. To do that and dissolve an LLC in Virginia, it is vital to know its reasons. Let’s take a look at those reasons here,
- If the company fails to pay the registration fee of the company or any other related fee.
- The company’s will says the time being of operation of the business has come to an end.
- An owner of the company needs to leave the company.
- The other members of the company are involuntarily removing a member of the company.
- There is no profit for the business from the past years.
- The economy is not in favor of the company at all.
Top Businesses in Virginia!
The state’s diverse economy makes it perfect to start an LLC in Virginia and thrive with it. The state’s service sector is getting a lot of importance, and it drives the economy to the road of development. With the help of this specific thing, we can learn the best way to operate the business. All you need is the facts of industries then it will be effortless to go forward. Here, check them here below,
- Professional and business services: The state’s service sector related to the personal business is making a lot of effort for the economy. We can get to know that with the help of the amount of contribution to the GDP, i.e., $103.23 billion. The growth is with the use of technology in the business and internet service.
- Government enterprises: There are different government enterprises in the state, and they are increasing the economy by $84.81 billion. There are shopping centers, real estate markets, hospitals, and military bases that come under this one. With that, it is easy for people to get the service and go nowhere else.
- Manufacturing: The industry of manufacturing leads the economy by $40.3 billion to develop. The sector helps the raw material become useful for people and the money for the state. So it is a win-win situation for all. Many products like processed food products, chemicals, transportation equipment, etc., are well-known in the industry.
Virginia LLC Dissolution Review
Time needed: 1 hour and 30 minutes.
Here’s a recap of the steps you must follow when dissolving your Virginia LLC. Click on the steps in this list if you want to read the full detail.
- Use Virginia LLC Operating Agreement As Guide
Remember that when you started, you created an operating agreement. Use this agreement as guide in proceeding with the dissolution of your LLC.
- Close Tax Accounts
Make sure you close all your tax accounts to avoid incurring further costs.
- File Articles of Dissolution
File the article of dissolution to make it known your the state where your LLC operates that you are indeed no longer in business.
Yes, there a minimal fee of $25, which is charged by Virginia SOS to dissolve the legally registered LLC and proceed with the task of removal of their name from every tax list and benefits.
No, there is no requirement of revenue department clearance till the time the SOS of Virginia accepts the dissolution form.
The name will also get deregistered with the dissolution of LLC. But the name will not be allotted for the next 120 days. After that, if some business wants to name their LLC after the name chosen by you, then it is their choice.
If you have not dissolved your LLC, then you are liable for business privilege tax, and if it is not paid on time, then you are leveraged with 10% of the amount of tax or $50. After that, the additional penalties will increase by $1 per month. If it goes unpaid for a longer duration, then the chances of seizing your property are also possible for recovery of tax.
Yes, if you are dissolving your LLC, then you have to pay some amount to the probate judge also who was also present during the time of your LLC formation in the probate office. The minimum fee of the judge is $50, which can vary.