When you decide to stop conducting business services with your limited liability company in the state of Arizona, you’re required to officially terminate the Arizona LLC. Else, you would be held responsible for all recurring state fees and penalties. Dissolving Arizona LLCs involves a variety of important tasks, and this guide will show you how to dissolve an LLC in Arizona.
How to Dissolve an LLC In Arizona?
Every registered limited liability company in the state of Arizona has both annual reporting to the Arizona Corporation Commission and tax obligations to the IRS. Unless you formally terminate your Arizona limited liability company, your LLC in the state of Arizona will exist perpetually, must file the required reports, and pay all taxes due continually.
However, if a registered business fails to pay all taxes due, such an Arizona LLC would incur state fees and penalties that add up. That’s why the state of Arizona requires all business entities that want to stop business operation to go through the formal dissolution process, which involves the following:
Review Articles of Organization & Operating Agreement
To dissolve your business entity in Arizona, you should first check the business’s formational documents, which are the Certificate of Organization and operating agreement.
In most cases, these two formation documents could contain a section with rules or procedures on how to dissolve an LLC in Arizona.
Vote for the Closing of LLC
Most times, the procedures of dissolving an LLC specifically the Arizona LLCs start with the LLC members voting to close the LLC. This requires that some percentage of the LLC members vote in favor of the dissolution.
Some specific procedural requirements form part of the dissolution rules. These include setting a specific time for the LLC members to meet and vote. You’re required to give a notice to the members in advance about the dissolution meeting.
Unless stated otherwise in your operating agreement, Arizona’s LLC Act allows for an alternative method of LLC dissolution. The method involves obtaining a written dissolution consent from:
- more than a half of the entire LLC members; and
- one or more LLC members who is/are entitled to receive more than a half of the entire LLC’s assets upon the termination of the LLC.
Whether you follow the dissolution rules on the formational document or rely on the written consent, make sure you record the decision or resolution to terminate the LLC on a written consent form or in the official minutes of the dissolution meeting.
Winding Up
Before you can terminate your business entity in Arizona, you must take care of some certain “winding up” procedures, such as:
Pay Creditors
Before the Arizona LLC owners can transfer all the LLC’s assets to themselves and get the LLC dissolved, they must clear all business debts owed to creditors.
Tax Clearance
The next step is to clear all taxes and administrative fees owed by the Arizona LLC to the Department of Revenue.
The Arizona Corporation Commission won’t approve the dissolution request until all outstanding taxes, administrative fees, and applicable registration fees have been paid.
Distribute LLC Assets
The last winding-up step is the distribution of the remaining business assets to the LLC owners using appropriate written instruments.
The appropriate written instruments ensure that the LLC owners can claim ownership of the distributed asset after the dissolution of the LLC.
File Articles of Termination to ACC
Filing Articles of Termination (Certificate of Dissolution) to the ACC is the last step in the LLC dissolution. You, the LLC manager, or the representative are required to sign and file a copy of this form to the ACC in person or via mail or fax.
You can obtain this form, the instruction sheet for filling the form, as well as additional information from the ACC website [1].
Cost and Duration of Dissolving an Arizona LLC
Dissolving an Arizona LLC costs $25 and it normally takes about 20 business days for the processing to be completed. However, you can expedite the filings process to take just 4 to 5 business days by paying an additional fee of $35. Obtaining tax clearance from the IRS also takes about 30 business days.
FAQ
How do I close an LLC in Arizona?
To close an LLC in Arizona, file the articles of dissolution to the corporate filings section of Arizona Corporation Commission. However, there are some “winding up” steps you have to take before your filing can be approved. These include giving a notice to and paying creditors, clearing all outstanding taxes and dues, and distributing the remaining LLC assets.
Conclusion
This guide contains detailed instructions on how to dissolve an Arizona LLC. Just make sure you check the steps and closely follow the processes as outlined. Please note that if you have foreign LLCs in other states that are tied to the Arizona LLC, these foreign LLCs in other states must be dissolved before the Arizona LLC is legally dissolved.
