Iowa LLC dissolution is governed by a set process to make sure that all obligations and requirements are fulfilled before an LLC is closed.
If you are shutting down your business, restructuring, or dissolving your LLC for any reason, you will want to enact the due processes in order to avoid complications in the future.
This guide provides a step-by-step overview of how to dissolve an LLC in Iowa.
1. Check Your Operating Agreement
Firstly, check your LLC’s operating agreement and its provisions. Most agreements provide guidance and procedures on how to dissolve an LLC and include details on:
- Moderation roles of members.
- Obligation restrictions.
- Distribution of leftover assets and obligations.
Your operating agreement might be silent on the dissolution procedures; in that case, what governs the process is the Iowan law. This agreement is significant since it facilitates the precise handling of the dissolution requirements.
2. Vote to Dissolve the LLC
Plan the meeting with other LLC members in order to vote if they want to dissolve the company. This guarantees that those whose opinions are to be registered are fully informed and have their say. This decision should be cited in the minutes of the meeting.
Make sure that the decision taken to dissolve the LLC is within the voting thresholds within the Iowa operating agreement or the law in Iowa if there is no agreement. It is normally a requirement to consent unanimously or to vote a simple majority.
3. File Articles of Dissolution
To officially dissolve your LLC in Iowa, you will need to file the Certificate of Dissolution with the Secretary of State of Iowa. Here’s how to do it:
Obtain the Form: The certificate of Dissolution form requires downloading it from the website of the Secretary of State of Iowa, alternatively you can also telephone the office of the Secretary of State of Iowa for a copy.
Complete the Form: Give details like the name of the LLC that was registered, the date a specified condition is going to take place and the reason that prompted it. Ensure to be accurate as much as possible to prevent setbacks.
Submit the Form: The fully submitted form may be sent online or through regular mail. The filing fee ranges between $5 and $15 but may differ in some cases. Iowa Secretary of State’s site contains guidelines detailing costs and submission requirements that ensure verifying of current cost structure is done.
Confirmation: Once you have submitted the documents, the Secretary of State will send you an email confirming that the dissolution is legally complete.
4. Resolve Outstanding Liabilities
Before closing the LLC, several issues with debts, taxes, and obligations must be resolved beforehand in as neat a as possible manner.
Settle all the Payables: All debts and amounts owed to creditors must be cleared. Reach out to creditors and make payment for any amount still owed to them, in addition, you can also ask for confirmation of payment
Final Tax Filing: Every state and the federal government must also file a final return once these processes have been performed. Make sure that you also mark the tax forms that you are submitting today as the ‘last’ for the LLC. As Iowa requires, you are to file all taxes due and paid for before the process of dissolution can begin.
Revoke all Licenses and Permits: All active business licenses and/or permits issued to be carried out by the LLC or those that have been obtained after or during the existence of the LLC must be closed. Inform the registration authorities about this cancellation of permits or licenses so that they are not disturbed with unnecessary payments later.
5. Notify Stakeholders
Explain to all the relevant people as to why the decision has smoothly been reached.
Employees: It is not only courteous but also a matter of concern to disclose to the employees about the termination of the business and issue them their last desolvation pay, any benefits, and notices to be issued.
Creditors and Lenders: This means that creditors/lenders are not only to be informed about the business termination but any claims owed to them by the LLC should be paid.
Customers and Clients: Customers and clients should also be informed about the decision and notice sent especially if there are unfulfilled orders, contracts, or subscriptions waiting to be fulfilled.
Notices are supposed to be provided also to protect the LLC from future claims and enhance transparency.
6. Division of Assets
Once liabilities are settled, the next step is to divide the remaining assets of the LLC among the members. This procedure should be aligned with the procedures given in your operating agreement.
In the absence of such an agreement, the law usually provides for assets to be shared in accordance with the ownership percentage of each member. Such a process ought to be documented for record and compliance purposes.
7. Cancel the EIN of the LLC
For an LLC that has been given an Employers Identification Number (EIN) by the IRS, it will be necessary to inform the IRS of the dissolution. To cancel the EIN:
- Write a letter to the IRS requesting cancellation of EIN.
- Indicate the full legal name of the LLC, EIN, and confirm that the LLC has been dissolved.
- Send the letter to the IRS at the postal address provided on the IRS website for EIN procedures.
8. Maintain Records
Be sure to keep copies of all the documentation of the dissolution, the meeting minutes, and tax returns, along with any correspondence that takes place for your records. Under Iowa law, you may have to keep the documents for several years. Having the records in order confirms that you comply with the law and will be useful in case of any problems in the future.
Additional Considerations
Administrative Dissolution: If an LLC does not follow business legal requirements like filing annual reports, then the state has the right to dissolve that business. This is inconvenient for business owners since resolving such a situation requires reinstating the business along with the payment of some required penalties. Such situations can be easily avoided by making compliance a business practice.
Legal Assistance: Whether you are closing down your business with intent or otherwise, you must be certain about the multiple legal processes involved. If, at any point, you find yourself unsure, you should reach out to a lawyer or a professional service who will be able to assist with all the requirements and make sure no step has been skipped or overlooked.
Timeframe: There isn’t a single timeframe within which the closing procedure for an LLC can take place because there are so many factors that can affect timings, including but not limited to affairs and business scale, and the efficiency of the Secretary of State’s Office. It is better to plan and make sure that there is enough time for the process.
How EasyFiling Can Help
It is without a doubt that dissolving an LLC is an intricate legal and administrative undertaking that can often overwhelm owners. However, the experts at EasyFiling understand the need for such services and can simplify this process for business owners.
Our professionals can prepare and submit documents: The team engages in the preparation of documents for the dissolution of the business and makes efficient filings with the Iowa Secretary of State including the Certificate of Dissolution.
Settle Complete Obligations: We aid you in resolving unpaid taxes, liabilities, and debts, and even help you comfortably finish off your LLC.
Compliance Support: EasyFiling ensures you are compliant with the statutes such as regulatory requirements that may result in delays and penalties.
Maintenance of Records: We assist in records management for easy storage and retrieval when needed.
If EasyFiling is chosen, it will save you on mundane chores while allowing a competent team to take care of your LLC dissolution.
Book a free consultation today to dissolve an LLC in Iowa.
Frequently Asked Questions (FAQs)
How long will it take for LLCs to dissolve in Iowa?
The Iowa Secretary of State and the Iowa state services have different LLC dissolution timeframes, With some LLCs only taking a few days while more complicated ones take weeks.
What happens if I don’t dissolve my LLC properly?
Failure to properly dissolve your LLC can result in ongoing tax obligations, penalties, and administrative dissolution by the state. Additionally, creditors may still pursue the LLC for outstanding debts.
Do I have to inform the IRS when disbanding my LLC?
Filing your final tax returns in conjunction with canceling your EIN ensures that the IRS is notified about the dissolution of your LLC and therefore, future tax obligations are not placed upon you.
Is it possible to reinstate my LLC after disbanding it?
While it is true that voluntary disbandment is usually final, if your LLC was administratively dissolved, then it may be possible to reinstate it by filing the required documents and paying the necessary fees.
What is the need to work with a service such as EasyFiling?
Having the disbarring process simplified is one of the key benefits that EasyFiling seeks to provide ensuring that the accuracy and efficiency of the process is maintained. Ultimately, a professional service directly saves time and prevents from taking additional hassle during such a complicated process.
Nabin Adhikari
