To dissolve an LLC in Alabama, there are precise procedures that guarantee the smooth cessation of business activities.
Regardless of whether you are shutting down operations due to the lack of profitability or simply because the members have all consented to shutter, adhering to the proper processes remains vital in the business to avoid penalties or legal ramifications.
Let us look into how you can dissolve an LLC in Alabama step by step.
1. Hold a Meeting and Vote to Dissolve the LLC
Before any form of documentation is submitted to the state, a decision to dissolve the business has to be made by the members of the LLC. This calls for a meeting where a vote is taken to resolve to dissolution of the LLC.
Check the Operating Agreement: In case your LLC is operating with an operating agreement, there are chances that the dissolution procedure is being specified in the document. It includes how the members are supposed to vote and the number of members that should vote in favor. In Alabama, in the absence of the operating agreement, the state law can set forth how the dissolution procedures should be.
Document the Vote: As soon as the votes are cast, the decision is made, and accounts of the member’s approval are captured. A copy of the minutes must also be preserved to act as evidence for the dissolution decision.
If you are confused about how to take the vote or what comes next, EasyFiling will help you in filing the correct way to be compliant with the internal rules of your LLC as well as Alabama state laws.
2. Settle the LLC’s Debts and Liabilities
Before you dissolve your LLC, attending to any outstanding dues is crucial. This covers paying borrowers, employees, and contractors. This stage may also include selling business property to help pay off these debts.
Alert Creditors: Tell your LLC creditors about your dissolution and allow them to present their claims.
Settle Debts: Pay any remaining debts before proceeding with dissolution to make sure all obligations are erased.
Tax Filings: Do submit final tax return filings and settle all payable taxes to the IRS and Alabama’s Department of Taxation.
EasyFiling will assist you in filling out and filing these tax forms as well as meeting all federal and state demands. We can also proactively advise you on unpaid taxes or debts so that you do not face any trouble in the dissolution of the entity.
3. File the Articles of Dissolution with the Alabama Secretary of State
After settling the LLC debts, you are now in the position to file Articles of Dissolution with the Alabama Secretary of State. LLCs are now going to be legally accepted as dissolved in the state.
Filing Methods: The Articles of Dissolution could be submitted via email or postal services. On payment of a $100 fee, the state will accept the documents. Important details such as the established date and the decision-making date of dissolution will also be included in the documents of dissolution.
Processing Time: The Secretary of State will take notice of the documents and then move forward to update every detail and status related to the LLC. Once he has approved the documents, the LLC is completely dissolved.
If these instructions seem like a hassle, then don’t worry. EasyFiling has trained professionals who are more than willing to help you through the filing issue of the Articles of Dissolution. We know how to get our clients their submissions without letting them go through any form of hassle with the process of dissolution.
4. Notify the IRS and File Final Tax Returns
Upon dissolving your LLC, it is critical to contact the IRS to file the last tax returns. This will assist you in avoiding tax liabilities in the future.
IRS Tax Filing: Depending on how your LLC is filed for taxes, you may have to submit Form 1065, Partnerships Return, or Form 1120, Corporations Return.
Employers and Final Employees Tax Payment: If the LLC had employees, you will need to submit the last tax returns for the employment tax system and put “final” to let the IRS know that the LLC is done.
EIN Closing: Additionally, you may want to cancel your LLC Employer Identification Number (EIN), but this is not required.
EasyFiling can assist you in preparing the last tax returns for your LLC and ensure that the employment and income taxes of the company have been dealt with correctly. Our professionals will guide you through the particularities of federal-level tax filings, aiming for compliance with the law and reduction of penalties.
5. Cancel Licenses, Permits, and Business Accounts
You have to inform the authorities upon dissolution of these licenses, permits, and business accounts held under an LLC to ensure that additional fees or Other possible liabilities are not incurred.
Notify Cancellation of all Permits and Licenses: Inform the required state or local bodies of the cancellation of business permits or licenses.
Close the Business Bank Account: Close all business accounts under the name of LLC and provide the remaining balance to the shareholders.
Terminate Contracts for Services: Ensure that service agreements, public accounts, and any other contracts that were not earlier canceled are terminated.
EasyFiling can assist you in completing the final steps of your business like canceling the permits or license accounts. We can send any notices that service providers and authorities require when accounts need to be closed.
6. Distribute Remaining Assets to Members
When all liabilities are paid, all the other remaining assets will have to be shared among the members according to the operating agreement and the law. In Alabama, members are generally allotted an amount that relates to an owner’s share.
Ensure to Refer to the Operating Agreement: Assets will be shared according to the instructions contained in the LLC operation agreement.
In the Absence of Such Agreement: In the absence of an operational agreement, the law for Alabama will govern the sharing of the members’ assets.
EasyFiling can help you to appropriately distribute any remaining assets of the LLC and ensure the assets are divided according to legal requirements. We can provide guidance to make the distribution of the assets more effective while ensuring that all members of the LLC get the compensation they are entitled to.
7. Maintain Records for Future Reference
With the change in your LLC status, it is still very important to keep all related documents for several years. Documents such as taxes, dissolution papers, and all financial records.
Retain Documents for 3 to 7 Years: A minimum duration of 3 – 7 years is a prudent standard for retaining records of the LLC’s dissolution and financial activity. The documentation is essential in the event of an audit or disputable legal claims in the future.
EasyFiling can offer guidance on what records to keep and for how long. We can assist you in developing a filing system that allows you to minimize the burden that future legal or financial investigations may pose to you.
How EasyFiling Can Help You Dissolve an LLC in Alabama
With EasyFiling, an otherwise complicated and tedious process, such as dissolving an LLC, can be pieced together logically. Here’s how we assist the clients:
Expert Guidance: We provide step-by-step guidance that guarantees the fulfillment of all legal obligations during dissolution.
Document Preparation: We will assist you in the preparation and filing of the documents, including the Articles of Dissolution and final tax returns.
Debt and Asset Management: Our experts can offer guidance in working out debts and asset distribution, helping you manage the winding-up process effectively.
Compliance: We make sure that all rules for LLC dissolution are followed for the state of Alabama as well as the country to ensure no penalties are implemented.
EasyFiling can grant your business the peace of mind that comes with having a skilled professional handle its dissolution. Book a free consultation today to dissolve an LLC in Alabama.
Nabin Adhikari
