Closing your Louisiana limited liability company (LLC) will involve a variety of tasks. Among the most important are what is known as dissolving and winding up the business.
Dissolving Your LLC
Your LLC is registered with the State of Louisiana. Officially ending its existence as a state-registered business entity, and putting it beyond the reach of creditors and other claimants, begins with a formal process called “dissolution.” While an LLC may be involuntarily dissolved through a court decree, this article covers voluntary dissolution by the LLC members.
In order to voluntarily dissolve your LLC, you first should look to the company’s formational documents—the articles of organization and operating agreement. In most cases, one of those two documents will contain a section with rules for how to dissolve the company. Typically the rules will require a vote of the LLC members on a resolution to dissolve and a requirement that some percentage of members vote in favor of the resolution. Make sure you follow any specific procedural requirements that may be part of the dissolution rules, such as setting a specific time to meet and vote and giving advance notice to all members regarding the meeting.
Also, unless your articles of organization or operating agreement provide otherwise, Louisiana’s LLC Act allows for an alternative method to voluntarily dissolve an LLC: a majority vote of the LLC members.
For either approach to dissolution of your LLC—relying on rules in formational documents or majority member vote—you should make sure to record the decision to approve the dissolution in the official minutes of the dissolution meeting or on a written consent form.
Articles of Dissolution
After dissolving your LLC and as you begin the process of winding up (see below), you may need to file articles of dissolution with the Secretary of State (“SOS”). The articles of dissolution will contain basic information about your dissolved LLC, including the following:
- the LLC’s name
- the filing date for the LLC’s articles of organization and of all amendments to the articles of organization
- the reason for filing the articles of dissolution (such as a majority vote of members); and
- the effective date of the articles of dissolution if other than the filing date.
The articles must be signed by one or more managers if your LLC is manager-managed, or by one or more members if your LLC is member-managed.
You may also need to publish a notice of authorization of the dissolution stating that your LLC is to be liquidated out of court, at least once in a newspaper of general circulation in the parish where your LLC’s registered office is located. A copy of the notice, with an attached affidavit from the publisher of the newspaper attesting to the fact of the publication, must be filed with the SOS.
There is no form available from the SOS for the articles of dissolution, no online statement of the fees involved for filing the articles, and no SOS template for the notice of authorization. Therefore, you should consult with a local business attorney to determine whether you need to file the articles of dissolution and publish the notice of authorization, and, if you do need to file and publish, to assist you with drafting the documents.
Following dissolution, your LLC continues to exist for the purpose of taking care of certain final matters that, collectively, are known as “winding up” the company. You may choose to designate one or more LLC members or managers to handle the winding up.
Compared to other states, Louisiana’s LLC Act contains little information about what’s involved in winding up. (Other states refer to activities such as collecting LLC assets and resolving legal and other disputes involving the company). Two tasks the Act does focus on are:
- payment of all LLC debts and liabilities, including all costs and expenses of liquidation and any and all contingent liabilities of which the members have knowledge; and
- distributing remaining assets to LLC members.
When it comes to the second of these items, you are required to make distributions in a particular order. First, unless otherwise provided in your formational documents, you must pay any “interim distributions” due to members, as well as any distributions due to members who have withdrawn from the company. (Interim distributions generally are approved payments to LLC members occurring prior to and separate from dissolution.) Then, unless otherwise provided in your formational documents, you must distribute any remaining assets to members and former members (a) for the return of their capital contributions to the LLC; and then (b) respecting their membership interests, in the proportions in which the members generally share in distributions.
Notice to Creditors and Other Claimants
One other key task covered by the LLC Act is giving notice to creditors and other claimants of your LLC's dissolution. Giving notice helps limit your liability and also allows you to more safely make final distributions to members. In any case, unlike other states, giving notice appears to be a requirement under Louisiana law.
The details of Louisiana’s rules for giving notice are complicated. For known creditors and certain other known persons believed to have valid claims against the LLC, you are required to give notice by registered or certified mail. You are also required to publish a notice for two successive weeks in a newspaper of general circulation in the parish where the LLC’s registered office is located. The notices must call on the addressees to present their claims in writing and in detail, at a specified place and by a specified date not less than six months after the notice was mailed.
Because the notice rules are complicated, you are should have a business attorney assist you with this task.
Affidavit of Dissolution
After your LLC has been completely liquidated, you must file an affidavit of dissolution with the SOS. The SOS has an affidavit form available for download. To complete the form, you will need to provide:
- the name of your LLC
- the county or parish where your LLC is registered; and
- the signatures of all LLC members.
Note that the SOS’s affidavit form includes a statement that your LLC “is no longer doing business, owes no debts and is dissolved by filing” the affidavit. You will need to have the affidavit notarized.
There is a $75 fee to file the affidavit. Your filing usually will be processed within 1 week. You can pay an additional fee for expedited processing.
After the SOS receives your affidavit they will confirms that all fees, charges, taxes, unemployment compensation contributions, penalties, and interest have been paid as required by law. Then they will record the affidavit and issue a certificate of dissolution. Your LLC will cease to separately exist on the date given on the certificate. (Pending legal actions or lawsuits involving your LLC continue after the cessation of separate existence, and in some cases new lawsuits can be brought against your LLC.)
Your business name will become available for use by others after the SOS issues the certificate of dissolution.
Louisiana does not require that you obtain tax clearance before dissolving your LLC.
For federal tax purposes, check the “final return” box on your IRS Form 1065 (if your LLC is classified as a partnership for tax purposes) or IRS Form 1120 (if your LLC is classified as a corporation for tax purposes).
Is your LLC registered or qualified to do business in other states? If so, you must file separate forms to terminate your right to conduct business in those states. Depending on the states involved, the form might be called a termination of registration, certificate of termination of existence, application of withdrawal, or certificate of surrender of right to transact business. Failure to file the additional termination forms means you’ll continue to be liable for annual report fees and minimum business taxes.
You can find additional information, such as certain mailing addresses and filing fees, on the SOS website.
For information on dissolving and winding up LLCs formed in other states, check Nolo’s 50-state series on dissolving LLCs.
Final Advice: Dissolving and winding up your LLC is only one piece of the process of closing your business. For further, general guidance on many of the other steps involved, check Nolo’s 20-point checklist for closing a business and the Nolo article on what you need to know about closing a business.