It is essential to formally dissolve your LLC if you decide not to continue doing business with it. If you don’t do it properly, you may have to pay taxes, face penalties, or even be sued.
In this guide, you’ll learn how to dissolve an LLC in Wisconsin and avoid legal issues!
What Actually Is a Limited Liability?
Limited liability is defined as a responsibility that is limited to the capital invested in a limited partnership or corporation. An LLC, commonly known as a Limited Liability Company, cannot be incorporated until the Articles of Organization are received by the Wisconsin Department of Financial Institutions.How to Dissolve an LLC in Wisconsin
The members must give up control over the LLC’s ability to conduct business in order to dissolve it. To do this, they need to provide the secretary of state with an Article of Dissolution form. But one step in winding up a limited liability business is submitting these dissolution papers. The state where the organization’s governing documents were filed has the LLC on file. An LLC must be dissolved using the IRS form 966, the dissolution resolution, and the articles of dissolution.How to Prepare Your LLC for Dissolution
In order to dissolve your LLC, you must complete the following step first!- Call a meeting of the LLC’s members and officially dissolve the Wisconsin LLC.
- Provide the Wisconsin Department of Financial Institutions with all required annual reports.
- Pay off any balances on the LLC’s debts
- Resolve to pay all taxes and any outstanding expenses.
Steps to Dissolving an LLC in Wisconsin
Wisconsin LLC dissolution takes three general procedural actions. closing all tax accounts, having a Wisconsin LLC Operating Agreement, and then submitting the Articles of Dissolution paperwork to the Wisconsin Secretary of State. Here’s a step-by-step process to dissolve an LLC in Wisconsin.Step 1: Follow Your LLC’s Operating Agreement
An operating agreement is created when an LLC has been established as a legal company. The operating agreement serves as a detailed guide and contains all the details of how the firm will operate and develop. A dissolution procedure is also included in your agreement. The typical steps for dissolving an LLC are as follows:- The LLC members will first vote to dissolve the company at the dissolution meeting.
- The process enters formal processes if the majority votes “YES”.
- If a Limited Liability Company has a board of directors, dissolution of the company often requires a majority vote of the board members.
- Depending on state legislation and any applicable operating agreement.
- Some LLCs require votes reflecting the majority of shares.
- While some require unanimous consent.
Step 2: Completing State and Federal Tax Returns
In some states, filing is required both before and after notifying creditors and resolving claims. Before the Certificate of Dissolution may be filed, certain states need the business to have its taxes cleared. In these situations, the firm or LLC must first pay any back taxes that are owed. To exempt the Limited Liability Company from federal tax filing requirements, submit Form 966 to the IRS within 30 days of the date of the dissolution resolution.Step 3: Terminate LLC Licenses and Authorizations
Ask how to cancel the LLC’s licenses and permits by getting in touch with the governing bodies that issued them. You might be allowed to transfer an LLC’s licenses and permissions to another business structure or LLC under particular circumstances. Satisfy the tax authorities and your creditors. Before any LLC assets can be distributed to members, all known LLC debts must be satisfied. If the state requires it, request a tax certificate from the government to prove that the company is up to date with its tax reporting obligations. To revoke the LLC’s Employer Identification Number, get in touch with the IRS. File a cancellation or withdrawal request with the state or local government entity that issued the LLC’s DBA or fictitious name. Tax reporting responsibilities do not end when operations are stopped.Step 4: Informing Creditors that Your Business is Closing
- According to state laws, creditors who were unaware of the dissolution of the LLC may be able to file claims. So, you need to inform the creditors of your intent to dissolve the LLC.
- Express the dissolution in the state requires that there be public notification of the dissolution in the neighborhood newspaper.
- Send out a letter informing clients of the LLC dissolution, inform creditors of the LLC’s dissolution plans, offer a settlement, or pay the full amount due to them.
Step 5: Resolving Creditors’ Claims
A business under liquidation has the option of accepting or rejecting creditor claims. Accepted claims must be paid or have adequate repayment agreements arranged with creditors. Claims that have been denied should be informed in writing.Step 6: Distributing Any Remaining Assets
- The remaining funds may be distributed to LLC owners in accordance with their ownership interest after claims have been paid.
- Contact a tax or accounting professional for more information on distribution and your ongoing contingent liabilities.
- Follow state law as well as the Limited Liability Company’s bylaws, and divide any assets of the LLC equally among all of its members.
Step 7: Article Filing
The Article of Dissolution filed with the Wisconsin Secretary of State must include the name of the Limited Liability Company, the effective date of dissolution, and the cause for dissolution. A minimal filing fee must be paid. Articles of Dissolution must be filed with a nominal filing fee. Report the LLC’s complete tax records to the Internal Revenue Service and any state agencies that require it. File the articles and other documents with your state’s companies section or secretary of state.What might occur if you don’t dissolve your LLC properly?
You may be held personally liable for the following if you improperly dissolve a limited liability company:- Owed taxes
- Defaulted debt
- Lawsuits
