Dissolving an LLC or Limited Liability Company in Rhode Island is a process that requires a few steps to be completed so that the firm is known to be closed and absolved from future compliance obligations with the state.
In this article, we will help you with the steps that you need to take to dissolve an LLC in Rhode Island.
Step 1: Review Your Operating Agreement
The dissolution process is usually contained within the operating agreement which is the first to be examined. This entails the voting procedure, dispersing funds, and other primary procedures that need to be taken. If there are no such details in the operating agreement, there is a legal matter for how these procedures are to be carried out in the state of Rhode Island.
The operating agreement, as mentioned, also acts as a guideline for handling internal matters in the LLC. It might also contain specific instructions for handling dissolving issues between the members. So much more time is spent going through this document instead of the other remedy, which is going to court.
Step 2: Obtain Member Approval
As mentioned, the presence of at least a single member in an LLC is as necessary as any other member. To abolish an LLC there is a need to vote and usually, some conditions specify who can vote and where. These details can be found in the operating instructions or articles of the organization. Ensure that you keep copies of the meeting minutes or a resolution to document this decision.
If your LLC does not have an operating agreement, Rhode Island’s default LLC laws will require members to agree on dissolution. Make sure all members are on the same page so that there are no disagreements. Seek advice from a legal practitioner when you can’t agree.
Step 3: File the Articles of Dissolution
To dissolve your company you will need to dissolve it verbally in a casual talk with all members of the LLC but this will have to be filed with the Rhode Island Department of State so here is how you can go about it.
Making sure the form is correct, Start by downloading the Articles of Dissolution form from the Department Of State of Rhode Islands official website. Remember that this form is critical in the process of bringing your LLC to an official closure.
Type in all the necessary details, these include:
1. Name Of The LLC
2. Date that the LLC filed for dissolution
3. Statement which confirms that all members approved of the dissolution
Log into the website and upload the form or send it off via mail along with the deposit of the dissolution fee but make sure to check the Department of State website for amendments to the fee or other changes.
Physical Address: Business Services Division Rhode Island Department of State 148 W. River Street Providence, RI 02904
The completion time may differ as per the submission channel. If you need your submission processed quickly, contact the Department of State to find out about other costs and what additional options are available.
4. Pay Off Remaining Debts and Liabilities.
You must take care to list down all the relevant payments before shutting down your LLC, which is inclusive of the following:
- Paying off all remaining loans, debts, and obligations.
- Receiving payments related to payroll and delinquent vendor debts.
- Tax obligations owed to the Rhode Island Division of Taxation and the IRS.
Contact the Rhode Island Division of Taxation and ask for a service clearance certificate to mitigate an unresolved tax situation. Most of the time, this certificate is necessary to complete the termination phase. Remember to deal with unpaid sales, use taxes, or employer-associated due taxes.
Contact the creditors of your LLC if there are any and explain to them how the debts are to be paid off. If payment needs to be made in installments then prepare to guide them regarding payment documentation in the future. Not settling debts may lead to legal problems for the LLC and its members.
Step 5: Notify Creditors and Cancel Registrations
Inform the creditors, clients, and vendors of the dissolution of your LLC. This ensures the stakeholders are informed and can prepare accordingly. While notifying the creditors, send them a written notice detailing the dates within which they should settle their accounts.
Furthermore, terminate all licenses, permits, registrations and ever associated with your business entity, such as:
- Business entity registration with the Rhode Island Department of State
- Employer Identification Number (EIN) registration with IRS if any
- State and local business permits
If these registrations are not canceled, they may lead to being charged fees or penalties. Prepare a list of all the permits or licenses held by the LLC so as not to forget any.
Step 6: Distribute Remaining Assets
After paying off the debts, disburse the remaining assets to the members of the LLC. You should do this according to the plan specified in your operating agreement or required by the laws of the state of Rhode Island. The categories normally included in the distributions of assets are cash, equipment, or any property owned by the LLC.
Also, do not forget to document all distributions by writing down, for example, receipts and members’ acknowledgments of the distributions. Distributions for members’ ownership in the LLC should be distributed whether otherwise indicated in the operating agreement.
Since your LLC has assets such as real estate, you need to seek assistance from a financial advisor or appraiser to set a valuation on them before disbursing them. This goes a long way in ensuring equity and resolving any preexisting issues among the members.
Step 7: Maintain Records
You should have copies of every document concerning the dissolution of your business. This includes:
- Articles of Dissolution
- Tax clearance certificate
- Final tax returns
- Meeting minutes or resolution approving the dissolution
Just like in the other jurisdictions, Rhode Island imposes a record retention period for all businesses. These documents can also act as verification that the business was properly dissolved.
There are many methods of keeping satisfactory records of your business. For instance, sensitive information can be stored electronically on cloud-based services or even on physical forms such as filing cabinets.
Additional Considerations
Final Tax Returns: If you are tax clearance requires you to attach your tax clearance certificate, ensure your final state, local, and federal tax returns are marked “Final”, indicating business closure.
Legal Advice: It is advisable to seek advice from legal or financial experts so that you don’t skip any needed steps while dissolving the business, Experts are good at offering recommendations since each LLC case is different.
Employee Notifications: If your LLC employed people, you must notify them about the dissolution, give the last paychecks, provide benefits information, and give any other notices that are required.
Notify Banks and Close Accounts: Your business checking accounts credit cards and other financial accounts should be closed. Inform the bank of the dissolution, close all the accounts, and pay off the balances.
How EasyFiling Can Help
LLC dissolution is a complicated process that is lengthy and time-consuming. However, EasyFiling makes it easy for you. Below is how we can help.
Expert Guidance: Let our professionals do their jobs by ensuring all the necessary steps stipulated by Rhode Island laws are complied with to making any errors or delays.
Document Preparation: Articles of Dissolution accurate completion will be ensured as we will be responsible for the entire process of filing, preparation, and submission on your behalf.
Tax Clearance Support: We facilitate the process by helping persons obtain a tax clearance certificate from the Rhode Island Division of Taxation.
Outstanding Obligations: EasyFiling offers advice on clearing debts, cancellation of licenses, and notifying the other parties.
Record Keeping: Our company helps you store the documents and information that you might need later.
It’s easy to get your Rhode Island LLC dissolved because EasyFiling has taken out all the complexity from the simple. Book a free consultation today to dissolve an LLC in Rhode Island.
Nabin Adhikari
