To dissolve your Pennsylvania LLC, there are several legally binding steps you must comply with before your business entity can cease its existence. To avoid penalties and lawsuits during the process, our team will guide you on how to dissolve an LLC in PA through this helpful and detailed post.
How to Dissolve an LLC in PA
Accomplish Tax Clearance Certificates
As a registered Pennsylvania Limited Liability Company, your corporation has an obligation to pay state taxes. Before filing dissolution forms, you need to acquire a tax clearance certificate from the Pennsylvania Department of Revenue and the Bureau of Employment Security.
The application for a tax clearance certificate should be filed at the mailing address of the Department of Revenue and the Department of Labor and Industry to close your LLC business tax accounts officially.
Keep in mind that these tax clearance certificates will be needed when you submit dissolution documents to the secretary of state, so our team’s advice is to accomplish this matter ahead of time.
Review LLC Operating Agreement
After closing the tax accounts of your Pennsylvania LLC, the next crucial step you must do is to review the contents of your business operating agreement and articles of organization. These company documents have specific provisions regarding how the dissolution process should be executed.
Typically, the operating agreement will address step-by-step procedures on notifying LLC members regarding a board meeting and the accepted vote percentage for any motion to proceed and be recognized by the state.
Vote for LLC Dissolution
In accordance with your LLC’s business operating agreement, organization members are required to participate in a board meeting to discuss the filing of dissolution. Through this procedure, members have the right to vote in favor or against the decision.
Even if the business articles don’t have provisions for the dissolution process, the state of Pennsylvania has an LLC Act that permits alternative methods such as accomplishing a unanimous consent form.
Considering that this is an official business affair, no matter what the result is, everything discussed between the LLC members must be recorded in the minutes of the meeting in case of disputes.
The state of Pennsylvania requires any business operating under its jurisdiction to wind up its final affairs before the state can exempt the LLC from mandatory state fees such as taxes. This procedure can be executed by a business manager or a member authorized by the corporation.
One of the most crucial steps you must handle when learning how to dissolve an LLC in PA is notifying your LLC’s creditors. Although it’s not required to inform claimants about the dissolution, this is a business practice that will maintain your good reputation as an LLC in Pennsylvania.
Failure to do this may result in troublesome lawsuits from creditors, so our team’s advice is to work with a law firm or professional registered service agent when executing this procedure. The notice must include the deadline of filings and the mail box address where they can send their claims.
Settle LLC Assets
After completing all the steps about business debts, it’s now time to distribute the remaining assets to the former and current LLC members. Through the terms written in the organizational articles, a business should pay back all the capital contributions made to the LLC.
The distribution of assets must also be based on profits and any other compensation that can be considered as income from their contributions.
File for Certificate of Dissolution
With liabilities and obligations already accomplished, you can now proceed to file the certificate of dissolution to the Pennsylvania Department of State. Along with the corporation articles and basic information, the dissolution form must include statements clearing your corporation from any outstanding court actions, lawsuits, and debts.
This is provided that certificate and forms are signed by an LLC authorized individual or member and filed along with the business tax account certificate. Besides sending your filings via mail, you can also download the certificate of dissolution form online on the website of the Department of State.
Take note that you’ll need to check the “final return” box on IRS Form 1065 when you file for the final federal tax return.
Process for Foreign LLCs
Any foreign Pennsylvania LLC can be relieved of state obligations and liabilities upon filing an Out of Existence and Withdrawal Affidavit (REV-238) forms to the office address of the PA Department of Revenue .
On top of that, a foreign LLC in Pennsylvania must pay all tax accounts dues and submit a final report regarding the divestiture of remaining company assets. Filing a Withdrawal Affidavit form does not only mean exemption from corporation tax reports. It also allows corporations to be reactivated later.
Business Name Availability
Upon the dissolution of your Pennsylvania LLC, your company name will automatically be made available in the state name register. Any business entity interested in forming its corporation in the state can freely apply for it.
If you intend to operate again using the same LLC name and hire the best LLC formation companies, going through voluntary dissolution isn’t something our team will recommend.
Duration and Cost of Pennsylvania LLC Dissolution
Upon successfully submitting all the LLC dissolution requirements to the Pennsylvania Department of State, the processing of the articles usually takes about a week or so. There’s a minimal filing fee of $70, and additional costs may incur upon request of a certified copy.
If you want your dissolution to be processed right away, the Pennsylvania state office offers expedited processing of your business documents. Also, expect additional payment when you decide to let a registered service agent handle your entire LLC dissolution.
How do I close an LLC in PA?
To close an LLC in PA, you’ll need to settle all business taxes owed to the state of Pennsylvania and gain majority approvals from the members. After these procedures, you must pay all debts and liabilities before the remaining assets can be distributed to the current and former members of the entity. And then, you can finally file the necessary forms to the DOS and wait for the dissolution to take effect.
The best method to avoid legal disputes from creditors and other business partners is none other than learning how to dissolve an LLC in PA properly. However, there’s also no shame in choosing to seek help from professional services and attorneys when handling these matters. After all, going through voluntary dissolution means that you want to end all business affairs on a good note.