Hailed as one of the top states for business in America, it’s no surprise why many entrepreneurs like you seek to incorporate in Virginia. However, despite the excellent trading environment, there are specific expenses you must track to maintain your perks.
In this post, our business experts will discuss all Virginia LLC fees so that you can avoid lapses and possible penalties.
How to Dissolve an LLC in Virginia
Like many other states, your Virginia LLC is registered with the State of Virginia once the Articles of Organization is approved. But closing your LLC in the state of Virginia involves a series of “winding up” steps to have the LLC dissolved.
Steps to Dissolve an LLC in Virginia
Review Operating Agreement
The steps on how to dissolve an LLC are typically outlined in a section of the operating agreement. You may need to review the operating agreement and follow the requirements that form the dissolution rules to file for dissolution. If your operating agreement does not have any set dissolution rules, you should consult the VA State Corporation Commission for further instructions on filing for dissolution.
Winding Up
You need to do some things before you can begin the Virginia LLC dissolution process. This is referred to as “winding up.” What you need to do before the LLC dissolution request is approved by the Virginia State Corporation Commission and after the LLC is dissolved largely depends on a few factors. These include whether or not your Virginia LLC has commenced any business transactions, and how many assets, liabilities, or debts your LLC has.
If your LLC did not transact business before the dissolution process, our team of experts found that the process will be easier and simpler. However, if your LLC has commenced active business transactions before the dissolution takes place, the process would include assets distribution to LLC members, paying back of the LLC’s liabilities and debts, if any, and paying off obligations to the Virginia Department of Revenue (IRS). Some common steps include:
- The LLC members must hold a meeting and vote to dissolve the Virginia limited liability company
- The minutes of the meeting of the dissolution vote must be recorded. If the LLC has no member, the owner(s) must apply for dissolution.
- Filing all required annual reports or registrations with the VA State Corporation Commission
- Distributing LLC assets to members and clearing up any claim or debt with creditor(s), if any.
- Paying any applicable administration fees, annual registration fee, and outstanding taxes payable to the VA State Corporation Commission
Settle Tax Accounts and Notice to Creditors
The Virginia State Corporation Commission will not approve your dissolution request if your Virginia LLC still has administrative fees and related outstanding taxes to pay off. Hence, you must pay all your outstanding taxes before you can close your business. Here are some common taxes your LLC may have to settle:
- Unemployment Insurance Tax and Employee Withholding Tax (if your LLC has employees in Virginia)
- Sales and Use Tax (if your LLC sold taxable goods or services in Virginia)
Settling your tax accounts requires you to file a final return to the applicable agencies, and some tax accounts require submitting additional official documents. You may need to hire a Certified Public Accountant or attorney to assist you with closing your tax accounts. Once you have settled all tax accounts, you have to file Form 966 [1] with the IRS and close the IRS account connected to your LLC’s EIN. This makes the EIN inactive.
You are also required to give notice to your creditors. Though this document is optional, it will help in limiting your liability. Our team found that under Virginia law, the document should include a mailing address, the effective date of dissolution, and a deadline for submitting any outstanding claim.
Articles of Cancellation
You must file Articles of Cancellation Form to voluntarily cancel your certificate of organization and close your business. You will have to pay a $25 fee to file these articles. Once you file the Articles of Cancellation, it will be processed by the Virginia State Corporation Commission, and your LLC will cease to exist legally. You can submit these documents either online or via mail.
Your business name will become available for others to use once your articles of cancellation are processed.
Duration and Costs of Dissolving an LLC
The duration of dissolving LLCs depends largely on how long it takes to complete the required initial procedures. Once all the procedures are completed, our team found that it takes about seven to 10 days for the Commission to process the articles of cancellation.
The costs of closing a Virginia LLC depend on the requirements of the state and the provider or business law attorney you hire for the processing.
Importance of Dissolving a Virginia LLC
An on-operational Virginia LLC must be dissolved with the VA State Corporation Commission. Otherwise, your LLC will be responsible for recurring fees, taxes and penalties, which may land you in legal trouble.
Dissolving a Foreign LLC
Dissolving foreign LLCs requires filling out IRS Form 1056, Certificate of Cancellation, and filing them with the VA State Corporation Commission either in person, online, or by mail.
Conclusion
This guide has laid out the basic requirements on how to dissolve your LLC in Virginia. Our team of experts strongly suggests following all the requirements and steps mandated by the state in closing down your business. It is very crucial to properly dissolve your LLC if you want to prevent unnecessary tax penalties or legal issues.
