In Wisconsin, dissolving an LLC is a legal process that has multiple essential tasks as part of its procedures. This process guarantees that you accurately dissolve the LLC.
So, if you are planning to close the business due to financial constraints, a shift of purpose, or simply no longer want to operate, you are required to follow the process of dissolving the company accurately.
This article aims to provide you with multiple actionable tasks and the compliance requirements necessary to dissolve an LLC in Wisconsin.
Step 1: Vote to Dissolve the LLC
Obtaining a formal vote of dissolution from the members of the LLC is necessary to get the LLC dissolved and is the first step to obtaining an LLC dissolution. This particular vote is a requirement to shut down your company legally.
Check the Operating Agreement: Review the Operating Agreement written for the LCC carefully because within that document the percentage of votes needed for an LCC dissolution is present. The consensus is that most agreements tend to have the majority vote requirement while some that are peculiar have rules requiring all members to vote to approve the dissolution.
Schedule a Meeting: If your operating agreement requires a meeting concerning dissolution, such a meeting needs to be arranged among the members of the LLC. It is crucial to also make a record of the minutes of this meeting especially the resolution to dissolve the LLC. This shall make a record of the vote for future purposes.
Special Circumstances: In some instances, a resolution to dissolve an LLC may also extend to managers who have to provide an indication or notice to a particular person. These processes must always be done as per the requirements of your operating agreement.
Step 2: File the Articles of Dissolution with the State
Once the voting to dissolve the LLC is over, then you should bring forth the Articles of Dissolution to the Department of Financial Institutions of Wisconsin. This documentary form is what legally ends the existence of your LLC registered in Wisconsin.
Online Filing: The DFI of Wisconsin has availed a substitute for offline filing of Articles of Dissolution through their website thus making this step much easier to finish. You can visit the official website of DFI to complete filing the form by electronic means.
Paper Filing: Alternatively, a person can also go to the DFI site to download the Articles of Dissolution form and then mail a filled form to the department.
Essential Requirements: Articles of Dissolution have to be done and it requires the following details:
- Details and Name of the LLC.
- Approval date for the decision to dissolve the LLC.
- Other members and managers who are a part of the company.
- Name and contact details of the person who will oversee the dissolution request process.
Dissolution Request Filing Fee: The Fee required for putting forth a filing of the Articles of Dissolution ranges around $170 which is to be paid upon application.
Step 3: Settle Outstanding Debts and Liabilities
For a dissolution of the LLC to take place, there are a few processes that have to be completed, and addressing financial obligations standby is among them. If ignored even once these tasks can potentially land the business into legal obstacles even after it has officially shut down.
Pay Off Bills: All of the company debts must equity be paid off before the dissolution goes through, this includes vendor bills, outstanding loans, credit card debts, and any outstanding financial dues maintained by the business.
Inform Creditors: Any and every lender should be informed that the LLC is dissolving so that they have space to file claims against the company before the roster of assets is set.
Settle Taxes: The LLC may owe certain taxes to the federal, state, or local governments. If so, settle any outstanding income, payroll, sales, or business-related taxes owed. Ensure all tax returns have been completed including final Federal and State tax returns.
Step 4: Close Business Accounts and Cancel Licenses
After all debts and taxes have been settled, the next process is to terminate all company operational accounts and any active licenses, permits, or registrations held by your LLC.
Shut down Operational Bank Accounts: Any business bank accounts that are owned by the LLC must be closed. This will restrict any further activities from taking place and limit the fiscal engagements of the LLC.
Terminate Trade Permits and Licenses: Terminating any commercial trade permits and licenses be they municipal or county is a must. Such as zoning and health permits, registrations of professions, and licenses pertaining to the business. To cancel these, reach out to the relevant local agencies.
Unregister for Sales Tax: In case the LLC was registered for sellers use tax in Wisconsin, advise the Wisconsin Department of Revenue to terminate your registration for sellers use tax. It’s possible that as part of this process, you may be required to submit a final use tax return.
Step 5: Distribute Remaining Assets
Once all of the LLC’s liabilities have instead been resolved, the next course of action is to share the remaining assets of the LLC. This, however, must be done by the terms that were outlined in the operating agreement of the LLC.
Adhere to the Operating Agreement: The operating agreement should stipulate how remaining assets should be distributed between the remaining members or partners. Usually, assets are shared by the ownership percentages or any other agreed terms.
Consider Liquidation: Should the LLC own significant assets, real estate, shares, or inventory, for instance, that possess no possible use for the firm or the members, they would have to be liquidated. The money earned from the selling will then be allocated among the members as defined in the shareholding agreement.
Final Distribution: All the remaining assets should be finalized and shared, and documentation of such processes should be made available to all the members of the organization to ensure equal shareholding indeed shareholding was shared as intended. Ensure you set aside this and other records in case they are needed in the future.
Step 6: Notify the IRS and File Final Tax Returns
If you wish to dissolve your LLC, you will also have to inform the IRS, along with filling out the final tax returns. This ensures that you have taken care of your tax obligations and more importantly helps the IRS know that your LLC is no longer an active firm.
File Final Tax Returns: If your LLC was taxed as a partnership (Form 1065), you will need to file a final Form 1065 with the IRS. If your LLC was taxed as a corporation (Form 1120), file the final Form 1120. In both cases, check the box indicating that it is a final return.
Cancel The EIN: It’s telling the IRS you no longer plan to use the LLC’s Employer Identification Number (EIN) if you do this. This is a simple process but helps ensure your EIN is no longer tied to an active business.
File State Taxes: you have to ensure that all state taxes are submitted and paid as well. This includes the Wisconsin state income tax, and the sales tax if applicable. If needed, consult a specialist to deal with tax compliance with the laws of Wisconsin.
Step 7: Keep Business Records
Because LLCs are frequently sued and/or frequently infringe copyrights and get sued, even after the LLC has been legally dissolved and the owners believe that they no longer have to keep any business-related documentation, it is necessary to do so for a certain period.
Save Business Records: Financial statements, tax returns, employee records, contracts, and agreements are some necessary records that need to be kept. The IRS normally suggests maintaining the records for at least seven years.
Think About Digital File Preservation: To make access easy and improve state storage, a large number of companies choose to keep the records in digital form.
Step 8: Confirm the Dissolution with the State
Once you complete all necessary steps, you will need to verify with the Wisconsin-registered Department of Financial Institutions (DFI) that your LLC is fully dissolved.
Confirmation from DFI: After making out the Articles of Dissolution in the respective register of the company, the DFI will be able to confirm to you that the LLC is now fully dissolved necessary legal actions have been completed. This document will also indicate that the company no longer functions.
Includes publication: The same is true for the dissolution: it will also be added to the state publications and thus mark the legal end of the LLC.
Why Choose EasyFiling for Your Wisconsin LLC Dissolution?
Convenience: Leave the paperwork to us and file, and you will be able to save time and effort.
Expert Advice: EasyFiling walks hand in hand with you throughout the dissolution and helps you steer clear of mistakes that are commonly made.
Full Compliance: We make sure all penalties and issues are met which makes reducing the risk for penalties or issues down the line easier.
Affordable Service: Our LLC dissolution services pricing is fair and low which allows small businesses to afford them.
With the assistance of EasyFiling, you can rest assured that your Wisconsin LLC will be dissolved without any complications. So you can worry about your next business venture while we tackle the complexities of the dissolution process.
Book a free consultation today to dissolve an LLC in Wisconsin.
Frequently Asked Questions (FAQs)
What is the process of dissolving an LLC in Wisconsin?
To dissolve an LLC in Wisconsin, you must file Articles of Dissolution with the Wisconsin Department of Financial Institutions (DFI). This involves: setting debts, contacting creditors, and allocating assets among members. Apart from that, you’ll also need to file your business taxes and need to close any business accounts you have.
How to File Articles of Dissolution in Wisconsin?
One can file the Articles of Dissolution online or by post with the Department of Financial Institutions, Wisconsin. There is a filing fee applicable and the LLC has to be in good standing for it to be dissolved.
Will I be required to inform my creditors before dissolving the LLC in Wisconsin?
Yes, you are required to inform your creditors of the dissolution and clear all debts they owe to your LLC before doing so. This is to ensure that your LLC acts within the legal requirements of its state, thus avoiding future legal complications.
What will happen to my LLC if it owes taxes in Wisconsin?
There are liabilities such as taxes that need to be paid before your LLC is dissolved. Owing taxes to the Wisconsin Department of Revenue or any other agency must be taken care of to avoid fines or legal action even long after you dissolve your business.
Are you allowed to dissolve an LLC in Wisconsin without meeting with the other members of the LLC?
In most instances, it is perfectly acceptable to dissolve an LLC without a member meeting provided the operating agreement stipulates such conditions or all the members sign an agreement approving of dissolution. On the other hand, if the operating agreement or state law requires a formal meeting or a vote, then such requirements should be complied with in order to avoid challenges in the dissolution process.
Nabin Adhikari
