Closing your Nevada 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 Nevada. 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, here we are concerned with voluntary dissolution by the LLC members.
In order to voluntarily dissolve your LLC, you first should look to the company’s operating agreement. In most cases, it 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.
You should also be aware that, unless your operating states otherwise, Nevada’s LLC Act also provides an alternative method to dissolve an LLC: an affirmative vote or written agreement of all LLC members. Whether you choose to dissolve your LLC based on rules in your operating agreement, unanimous member vote, or unanimous written agreement, make sure to record the decision to approve the dissolution in the official minutes of the dissolution meeting or on a written consent form.
After 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 will probably designate one or more LLC members or managers to handle the winding up.
Under Nevada’s LLC Act, key winding up tasks include:
- prosecuting and defending lawsuits and other actions by or against the LLC
- collecting and discharging LLC obligations
- disposing of and conveying LLC property; and
- distributing assets.
On the last point, assets first should be used to pay LLC creditors, including LLC members who are creditors, to the extent permitted by law. Keep in mind that it is particularly important to pay any outstanding taxes. Then, LLC members should receive distributions. The rules for distributions to members can be complicated. Apart from checking your operating agreement, you may want to consult with a lawyer to ensure member distributions are handled correctly.
Articles of Dissolution
After you have completed dissolving and winding up your LLC, you must file articles of dissolution with the Nevada Secretary of State. The articles will contain basic information about your LLC, including:
- its name
- a statement that all debts, obligations and liabilities have been paid and discharged or that adequate provision has been made therefor
- a statement that all the remaining property and assets have been distributed among its members in accordance with their respective rights and interests; and
- a statement that there are no suits pending against the company in any court or that adequate provision has been made for the satisfaction of any judgment, order, or decree which may be entered against it in any pending suit.
You may choose an effective date for the articles of dissolution up to 90 days after the filing date. The articles must be signed by a manager of the LLC, or, if there is no manager, by an LLC member.
You must include a customer order form along with the articles of dissolution. This form provides the Secretary of State with basic information on how to process the articles.
There is a $100 fee to file the articles of dissolution. The document should be processed within about one week. You can pay additional fees for expedited processing.
Note on Tax Clearance
Nevada does not require you to obtain tax clearance from the Department of Texation in order to dissolve your LLC.
For federal tax purposes, make sure to check the “final return” box on your IRS Form 1065 when you file your final federal tax return.
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 a form for the articles of dissolution, the customer order form, 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.