The process to dissolve a Limited Liability Company (LLC) in Connecticut entails a sequence of actions that are in harmony with the local statutes and filing protocols.
If you are restructuring your organization or permanently shutting it down, the steps provided will help you safeguard against punitive actions and ensure compliance with the regulations in place.
In this article, we will help you with the steps that you need to take to dissolve an LLC in Connecticut.
1. Review Your Operating Agreement
To initiate the disbanding procedure, it is important to go through the operating agreement of the LLC. Most times, this document spells out procedures designated for cutting off the LLC including some of the following elements:
- Member’s or Manager’s Approval.
- Asset and debt distribution.
- Filing requirements.
This agreement acts as a rule book to ensure all members understand their roles and obligations when disengaging from the firm. Otherwise, if your LLC lacks one, its members will need to abide by Connecticut state law’s provisions.
So that you are well prepared to face these default rules, it is wise to speak to a legal expert so that you understand how these rules pertain to your circumstances.
2. Obtain Member Approval
If necessary, schedule a session with the LLC members to vote over the decision of dissolution. Write down the resolution and keep it in your files. This action is necessary for regulatory compliance and member discord.
Ensure that the action is consistent with the agreements reached in the operating agreement or the standing laws of Connecticut. It is easier with multiple parties to have a written resolution that everyone has signed.
3. File a Certificate of Dissolution
To legally cease “doing business” in Connecticut, and to formally remove the LLC from the Secretary of State’s office, a Certificate of Dissolution must be filed. Here’s how:
Download the Form: Connecticut Secretary of State forms can be found on their website. The certificate of dissolution form (form LLC- 5) is also available on the state’s website. This form is mostly available on the internet and when not, will accept hard copies.
Fill Out The Form: Here are some details you need to fill in the application for compliance with the certification requirements:
- LLC title that is registered in the state dominion.
- Dissolution date.
- The reason for dissolution (optional).
- Any other necessary compliance factors.
Submit the Form: File the finished form either online, through the mail, or in person. Make sure to confirm the filing fee which is set at $50 on the state’s website. Depending on the state, the amount of time taken to process the documents can also range quite a lot, confirm the timeline for filing your documents too.
4. Resolve Outstanding Obligations
Pay Debts: Settle all your debts with creditors, suppliers, and all other organizations. This protects and prevents you from any legal claims in the future.
Distribute Assets: Share all the remaining assets to all the members proportionally according to the operating business agreement. Ensure this is properly documented so that it limits conflicts.
Cancel Licenses and Permits: Ensure that the local and state authorities are informed to cancel, business registrations or permits and licenses. This avoids any penalties or unwarranted fees to be levied in the future.
Additionally, inform the service providers including landlords, utility services, and vendors about the dissolution of the company so that they can cancel the contracts or any agreements. Ensure that you keep detailed records of this closure so that it helps if there are any inquiries or audits in the future.
5. File Final Tax Returns
You are required to retire both state and federal tax obligations as a requirement of the dissolution of the LLC, Bear in mind that:
Federal Taxes: You are required to appropriately file with the IRS your last federal tax return. Also, if your LLC had employees, you must submit W-2s to the Government and file final employment tax returns. Depending on the situation, it may also be a requirement to file Form 966, Corporate Dissolution or Liquidation.
Connecticut Taxes: The Connecticut Department of Revenue Services requires that you submit a final Business Entity Tax Return. If you owe taxes to any other government authority, such as sales tax and payroll tax, or the corporate entity tax, you should also pay them and close your tax accounts. Allowing this to reoccur may result in you facing a penalty.
If unsure about any tax obligation, it is advisable to engage a tax professional.
6. Notify Creditors and Stakeholders
Make sure that creditors, vendors, and all other stakeholders of the LLC have been informed of the liquidation of the LLC. Such notice should include a statement that is in writing and that has details including:
- A date is effective on which the dissolution will be effective.
- A date that will limit claims from filing.
- The physical address, or website, to which the claims will be sent as well as documentation of the online submission process.
With the contracts now terminated, ensure that all valid claims and disputes are addressed before assets remaining in the company are distributed to members. This eliminates the likelihood of a legal issue later in time.
7. Cancel Your EIN
If you have previously made an application for an Employer Identification Number (EIN) through the IRS then make sure to write to the IRS for cancelation. This letter must also contain the legal name of the LLC, EIN, and the reason for wanting to cancel.
It must be noted that the IRS will not reassign the previously allocated EIN, and as such the number will remain with your LLC for history, even after cancellation.
8. Keep Records
In the aftermath of the dissolution of your LLC, ensure that you have copies of any tax filings, correspondence, and dissolution documents on you. Connecticut legislation makes it compulsory for you to hold onto business documents for a particular timeframe as a means for future queries or audits, usually for around 3-7 years.
Properly organized records may also ease the process if you wish to establish a new business or if you wish to refer to the dissolved LLC later.
How EasyFiling Can Help
It is cumbersome to dissolve an LLC and fraught with issues especially because of the different state laws. But EasyFiling makes this process easy. They ensure that you have expert guidance from them during all steps of your LLC. EasyFiling can help in the following ways:
Expert Guidance: Our team works with you throughout the entire LLC dissolution process. This includes completing forms including the Certificate of Dissolution and submitting them on time.
Compliance Verification: We make sure to comply with all the financial requirements by handling tax filing to make sure that there will be no future problems with compliance.
Customized Solutions: If you feel our services are too generic, and need us concerning employee account completions, dealing with intellectual property, or dealing in records retention, EasyFiling does not disappoint.
Peace of Mind: We understand how tiring and overwhelming the dissolution process can be, this is why EasyFiling guarantees you that every step is done professionally, while enabling you to shift your focus to more important things, such as your new business.
If you are worried about how the process is going to be seamless, do not worry, Book a free consultation today with Easyfiling to dissolve an LLC in Connecticut.
Frequently Asked Questions (FAQs)
How much does Connecticut charge a filing fee?
Connecticut’s charging filing fee is $80. However, you might be liable to pay additional taxes including: Asset tax, Annual report, and sales tax
How long does it take to dissolve your business in Connecticut?
Typically, it would take anywhere between a few days to a few weeks for the dissolution process to complete but AT EasyFiling we promise our customers that we will manage the process in under 30 days.
4. Is it possible to reverse the dissolution of my LLC?
It’s possible for some of you to be able to file the proper paperwork along with the payment of the dues and get your LLC reinstated. But this will depend on how long has passed since the dissolution and other related factors.
5. Is there an effect on my credit rating if I decide to wind up my LLC?
Winding up your LLC does not have any visible impact on your credit rating unless you provide personal guarantees for any business debts. Make certain that all debts are paid off to prevent credit issues later on.
Nabin Adhikari
