Closing your Minnesota 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 Minnesota. Officially ending its existence as a state-registered business entity and, by extension, putting it beyond the reach of creditors, begins with a formal process called dissolution. While an LLC may be involuntarily dissolved by a court order, this article covers voluntary dissolution by the LLC members.
In most other states, the law includes a simple, explicit statement that you are allowed to follow dissolution rules laid out in an LLC operating agreement or articles of organization. Minnesota’s LLC Act, however, does not contain such a statement.
Instead, the state’s LLC Act provides rules for nonjudicial dissolution of an LLC that has accepted contributions. These are the rules that must be followed to voluntarily dissolve an LLC in Minnesota. Under these rules, dissolution will require a vote on a resolution to dissolve by your LLC members. You’ll need to arrange for a meeting of LLC members specifically for the purpose of taking the vote. In advance of the meeting, you must provide a written notice to all members that states both that the meeting is going to take place, and that dissolution must be followed by winding up and termination of the LLC. Then, at the meeting, members with a majority of the voting power for the LLC must approve the resolution. (Make sure to record the decision to approve the resolution in the official minutes of the dissolution meeting or on a written consent form.)
Notice of Dissolution
After you have voted to dissolve the LLC, you must file a notice of dissolution with the Secretary of State. The notice of dissolution will state where and when the meeting to dissolve took place. It must also include a statement that the requisite vote of the members was received (in other words, that a majority of the voting power approved the dissolution).
There is a $35 fee for filing the notice by mail. It usually takes 7-10 business days to process your filing. You can also deliver the notice in person and pay an additional fee for expedited service.
Once you’ve filed your notice of dissolution, your LLC’s business name will become available for use by other people.
After filing a Notice of Dissolution, your LLC is expected to stop doing business, except for taking care of certain final matters that collectively are known as winding up the company. Under Minnesota’s LLC Act, these final matters will include:
- collecting or making provision for the collection of all known debts due and owing to the LLC
- paying or making provision for the payment of all known debts, obligations, and liabilities of the LLC
- disposing of all property and assets of the LLC; and
- after paying all known LLC debts, obligations, and liabilities, distributing all remaining property, including money, to LLC members.
One other, optional winding up task is giving notice to creditors and other claimants of your LLC’s dissolution. Giving notice can help limit your liability and also allow you to more safely make final distributions to members. The LLC Act has specific rules for how to give notice, including rules for publication of notices in newspapers and rules for what information a notice must contain. If you choose to notify creditors and other claimants, you should consult with a lawyer for assistance.
Articles of Termination
Regardless of whether the winding up of your business includes notifying your creditors, you must file articles of termination with the Secretary of State. Both the time for filing the articles and the contents of the articles will vary depending on whether you notified creditors. The articles will contain your LLC’s name, an indication of whether you gave notice to creditors and other claimaints, and an authorized signature. The effective date for the articles of termination may be up to 30 days after the filing date.
There is a $35 fee to file the articles by mail. Typical processing time is the same as for the notice of dissolution. Expedited processing is available for an additional fee.
After your LLC is terminated, the Secretary of State will issue a certificate of termination that will include the date the termination was effective.
Note on Tax Clearance
Minnesota does not require you to obtain clearance from the Department of Revenue in order to dissolve your LLC.
You can find some of the documents you’ll need for dissolution and winding up, as well as information on mailing addresses, online filing, and filing fees, by checking the Secretary of State’s 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.