To dissolve an LLC in Maryland, legal processes and paperwork must be completed. These steps ensure that the LLC’s obligations are fulfilled and its legal existence is terminated.
In this section, we provide a detailed guide that gives you a clear view of how to complete each step easily and effectively:
1. Operating Agreement Review
You should first check your LLC’s operating agreement. This document often outlines the procedures for dissolving the LLC, including:
- Approval requirements include voting by the members.
- How members and creditors are notified.
- How remaining assets are divided among members.
If the LLC does not have an operating agreement, then the default rules within Maryland’s LLC Act should be followed. This way you will not skip any steps while complying with the legal requirements.
2. A Vote is Held to Dissolve the LLC
If your documents or state law dictates, you will need to call a meeting of the members of the LLC to take a vote on the dissolution of the LLC. The decisions made during this meeting must be documented in the meeting minutes.
If the decision was unanimous, or a majority decision, make sure you comply with any voting thresholds specified in the range of the operating agreement.
Make sure that each member understands everything about the implications that come with dissolving an operation, including both financial responsibilities and the operations themselves.
3. Filing Articles of Dissolution
If you intend to officially terminate your Maryland LLC, you need to submit the Articles of Dissolution to the Maryland State Department of Assessments and Taxation. Below are the requisite steps:
Obtain the Form: Visit the Maryland SDAT website and download the Articles of Dissolution form, or you may phone their office and request the form.
Complete the Form: Fill in the following mandatory details:
- The legal name of the LLC as it appears in the records of the company.
- The date the dissolution was authorized by the members.
- A statement confirming that all debts, liabilities, and obligations of the LLC have been paid or otherwise discharged.
- A declaration that the LLC’s remaining assets have been distributed among its members.
Submit the Form: The completed form can be submitted online, by post, or in person. Payment of the filing fee is required, however, it is advisable to check the Maryland SDAT site for current fees as they do change from time.
Mailing Address:
State Department of Assessments and Taxation
Charter Division
301 West Preston Street
Baltimore, MD 21201
The processing time may differ depending on which method of submission you select. Expedited services are available but at an additional cost.
4. Resolve Outstanding Obligations
Evaluate all your business obligations before you dissolve the company. This includes:
Settle Debts: Pay off any debts owed to other people such as suppliers and service providers. If funds are tight, try and negotiate payment agreements.
File Taxes: Pay any remaining federal or state taxes. Make sure to inform the IRS and the Maryland Comptroller’s Office that your LLC has been dissolved to avoid future taxes. If applicable, request a tax clearance certificate.
Revoke Permits and Licenses: Revoke all business licenses, permits, and registrations related to your LLC so that you do not incur unnecessary renewal charges or fees.
The business obligations above must be addressed before proceeding with the dissolution to allow for a smooth transition without any legal issues in the future.
5. Inform The Stakeholders and Creditors
Notifying and allowing the creditors to submit claims is mandated by law in the state of Maryland. This will also protect the LLC from any potential future liabilities. Send a letter to all your creditors that they are aware of the LLC dissolution which includes:
- An explanation as to why and how the LLC is dissolving
- An explanation of how long the claims are accepted from the date of the notice – typically 120 days
- Details on where to send the claim including the full address
It is wise to keep a record of all interactions with your creditors to prove that you followed the steps of the process.
6. Allocation of Remaining Assets
After settling all the debts and payment obligations, make sure to apportion any existing assets among the LLC members. The Members’ distribution should be by the operating agreement’s stipulations if there are any. Usually, the assets are divided according to the capital contribution or ownership percentages.
Maryland default rules should be adopted for the division of the assets if there is no operating agreement. This step is crucial in safeguarding the members from conflict.
7. Closing the EIN of the LLC
After the process of dissolution is complete, ensure that you close the LLC’s Employer Identification Number (EIN) account with the IRS. To close the account, send a letter to the IRS containing the following details:
- Full Legal Name of the LLC
- EIN
- LLC’s registered address
- Statement of dissolution
Address:
Internal Revenue Service
Cincinnati, OH 45999
These pieces of information allow the IRS to amend its records about the LLC’s closure.
8. Document Retention
Make sure to also keep copies of all documentation and correspondence related to the dissolution of the LLC including:
- Article of dissolution
- Notification to creditors and feedback received
- Final tax returns and correspondences sent to the IRS
- Member resolution and minutes meeting
Keeping all these documents will guarantee protection in the case of legal challenges or audit issues.
Additional Considerations
Timeframe: According to the Maryland SDAT website the timeline regarding dissolution fillings can be anywhere between several weeks to a few days depending on the submissions done.
Professional Assistance: It amuses me when no one wants to videotape themselves but either pay a business lawyer or a professional to adhere to legal requirements
Penalty: One will have to remain extra cautious bearing in mind how important it is to follow all steps carefully. Otherwise, failure to dissolve the LLC properly, one may have to face taxes and legal issues or there is a possibility of penalties if all steps aren’t followed.
How EasyFiling Can Help
Dissolving an LLC in Maryland can be a time-consuming and complicated process. EasyFiling specializes in assisting business owners with LLC dissolution, ensuring a hassle-free experience. Here’s how EasyFiling can help:
- Step-by-Step Guidance: Our team will guide you through every step of the dissolution process, from filing the Articles of Dissolution to notifying creditors.
- Document Preparation: We handle the preparation and submission of all necessary documents to the Maryland SDAT and other relevant agencies.
- Compliance Assurance: EasyFiling ensures that all state and federal requirements are met, helping you avoid penalties or legal complications.
- Expedited Services: Need to dissolve your LLC quickly? We offer expedited processing options to meet tight deadlines.
- Professional Help: If you ever feel stuck, our specialized team is always just a phone call away to provide assistance.
With EasyFiling, you no longer have to worry about dissolving your Maryland LLC. You can look ahead into your next venture while saving all the time and effort EasyFiling will take to attend to the intricacies of dissolving the LLC.
Book a free consultation today to dissolve an LLC in Maryland.
Frequently Asked Questions (FAQs)
1. How long does it take to dissolve an LLC in Maryland?
The times vary depending on how you dissolve your LLC. Ordinarily, it takes about a few weeks, but if you choose expedited processing, it could be done within a few days. The best option would be to check with MD SDAT for a precise time estimation.
2. Do I need to file final tax returns before dissolving my LLC?
It is indeed very important to file both state and federal tax returns. In addition to this, make sure to not have any other taxes remaining to be paid because if you do, it will complicate things once you want to dissolve your LLC.
3. Can I dissolve my LLC without an operating agreement?
Yes, if your LLC lacks an operating agreement, the LLC Act’s default rules for Maryland can be utilized to dissolve your company.
4. What happens if I don’t notify creditors about the dissolution?
If there happens to be a failure to notify the creditors, you can be exposed to liabilities in the future. Proper notification will however help minimize such liabilities.
5. Why do I need EasyFiling to modify the LLC?
Dissolution of LLC through EasyFiling is a stress-free undertaking as all the documentation is handled by them without the hassle of state or federal regulations, with their support, you save both time and effort.
Nabin Adhikari
