A limited liability company (LLC) refers to a business structure allowed by a state statute. Like corporations, members or owners of LLCs are protected because they have a limited personal liability for the debts and actions of the LLC. Ownership of LLC is not restricted and may include individuals, corporations, other LCCs and foreign entities. However, there are types of businesses, such as banks and insurance companies, that cannot form an LLC. Nevertheless, termination of an LLC depends on the nature of its formation and the state laws and regulations governing the formation and the dissolution of LLCs.
Follow the dissolution process and the prerequisite approvals as outlined in the operating agreement of your particular LLC. Although LLCs are not governed by the resolution regulations of corporations, it is highly recommended that they document their decisions and members approval.
Notify the Virginia department of taxation. The department should be contacted by sending a secure email or by a telephone call (see Resources). Another option is through a live chat. This is necessary because the closure of the business does not necessarily mark the end of tax obligations.
Contact your Local Tax Commissioner of Revenue about the change in status of your business. The Commissioner of Revenue in Virginia can be contacted through a telephone service hotline. Since there are no appointments required, you can call its customer service and notify them that you have decided to close down your LLC.
Alert the Virginia Employment Commission in regard to plant closings, mass layoffs, worker adjustments and retraining, especially if you have employees. This is due to the closure of the LLC and its implications to the workforce. The workers’ plights should also be considered since most will be rendered jobless. You can contact the commission through their telephone service hotline to report the impending closure of your LLC.
Notify your creditors when your LLC has filed the statement of intent to dissolve. This should be done through mail and should instruct the creditors on the mailing address through which to send their claim(s). You should also notify them the deadline for submitting the claims as well as the consequences of forfeiting the set deadline.
Accept or reject the creditors’ claims but advise the creditors in writing in case you reject their claims. Pay the accepted claims and settle any other satisfactory arrangements that might be agreed upon with the creditors. You can also benefit from the services of an attorney in the process of settling down the claims of creditors.
Distribute the remaining assets to the LLC owners in proportion to their share of ownership. You must report the distributions to the Internal Revenue Service. In addition, if your LLC has multiple stock classes, there are bylaws that outline the procedures for distributing assets to these shareholders. You can also consult your accountant or tax adviser on the distribution of the assets.
File the certificate of dissolution with Virginia after the dissolution process has been voted by the members. File the paperwork with other states if your business was qualified to transact business with other states. The procedure for filing a certificate of dissolution varies from one state to another. In accordance with Virginia statutory guidelines, you must file the documents in Virginia after the LLC has resolved all its creditors’ claims and distributed its assets. In addition, follow the outlined guidelines while filling the certificate of dissolution.
Ndung'u Patrick has been an academic and news writer across various disciplines since 2003. An accredited journalist, he has worked with Kenya News Agency since 2009 as a press officer and holds a Bachelor of Science in communications and public relations.