Closing your Mississippi 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 Mississippi. 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 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 certificate of formation and the 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 more specifically 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.
Regardless of whether your certificate of formation or operating agreement contains any dissolution provisions, Mississippi’s LLC Act provides an alternative method to voluntarily dissolve an LLC that any LLC can use. Under these rules, you must obtain the consent of all LLC members.
Whether you dissolve the LLC based on rules in formational documents or by unanimous member consent, you should make sure to record the decision to approve the resolution in the official minutes of the dissolution meeting or on a written consent form.
Certificate of Dissolution
After you have voted to dissolve your LLC, you must file a certificate of dissolution with the Mississippi Secretary of State ("SOS"). The certificate of dissolution will contain basic information about your LLC, such as:
- its name
- the reason for filing the certificate; and
- the effective date for dissolution if later than the filing date of the certificate.
The SOS has a certificate of dissolution form available for download. There is a $50 fee to file the certificate.
Be aware that your business name will become available for use by others once your LLC is dissolved.
Following the vote to dissolve your LLC, the company continues to exist for the purpose of taking care of certain final matters that collectively are known as “winding up” the company. You will probably designate one or more LLC members or managers to handle the winding up.
Under Mississippi’s LLC Act, key winding up tasks include:
- paying any outstanding taxes
- paying, or making provision to pay, creditors (which may include LLC members) to the extent permitted by law, and
- making distributions to LLC members.
Regarding payment to creditors, Mississippi law more specifically states that you should make provision to pay “contingent, conditional or unmatured contractual claims,” any claims reasonably likely to result from a pending lawsuit, and “claims that have not been made known to the limited liability company or that have not arisen but that, based on facts known to the limited liability company, are likely to arise or to become known to the limited liability company within three (3) years after the date of dissolution.”
Distributions to LLC members should begin with distributions triggered, for example, by a member’s withdrawal from the LLC or by prior agreement among LLC members. Any remaining assets should be distributed to members (a) for previous contributions to the company; and then (b) in the proportions in which the members share in distributions.
Notice to Creditors and Other Claimants
One other key task, generally considered part of winding up, is giving notice to creditors and other claimants of your LLCs dissolution. Giving notice is optional. However, doing so will help limit your liability and also allow you to more safely make final distributions to members.
Under Mississippi law, you can give notice by sending a written document directly to known claimants after filing your certificate of dissolution. Proper written notice must include a variety of information, including:
- a description of information that must be included in a claim against the LLC
- a mailing address where a claim may be sent
- a deadline for a claim, which may not be less than 120 days from the later of the mailing date of the notice or the effective date of the certificate of dissolution; and
- a statement that the claim will be barred if not received by the deadline.
You may also give notice to unknown claimants by publishing in a newspaper. As with sending direct notice to individual claimants, there are specific rules for giving notice through publication. Generally speaking, claimants have three years after the date of newspaper publication to bring a claim.
There can be certain advantages to giving direct written notice to individual claimants. In any case, if you choose to give claimants notice of your LLC’s dissolution, you should strongly consider getting assistance from a business attorney.
Note on Tax Clearance
Mississippi does not require you to get tax clearance from the Department of Revenue before you can file your certificate of dissolution.
You can find additional information, such as forms, mailing addresses, and filing fees on the Secretary of State website.
For information on dissolving and winding up LLCs formed in other states, check Nolo’s 50-state series on dissolving LLCs.
Note: 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.