Closing your North Dakota 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 North Dakota. 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, here we are concerned with 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. North Dakota’s LLC Act, however, does not contain such a statement. Instead, the state’s LLC Act provides rules for voluntary dissolution of an LLC that has already accepted contributions.
Under the state rules, dissolution requires a formal vote by your LLC’s members on a resolution to dissolve. 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 written notice to all members that states, among other things, the date, time, and place of the meeting, that the purpose of the meeting is to consider a resolution to dissolve the company, and that dissolution must be followed by winding up and termination of the company. 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 dissolution in the official minutes of the dissolution meeting or on a written consent form.
Because North Dakota’s LLC dissolution laws are somewhat unusual, you should consider speaking with a local business lawyer before voting to dissolve your company.
Notice of Dissolution
After you have voted to dissolve the LLC, you must file a notice of dissolution with the North Dakota Secretary of State. The notice of dissolution will contain:
- the name of your LLC
- your federal tax identification number; and
- an indication of the basis on which your LLC was terminated (namely, a resolution to dissolve was adopted by a majority of the members, including the date the resolution was adopted and the place where members met to adopt the resolution)
The notice must be signed by an authorized individual.
There is a $10 fee for filing the notice. It can take up to 30 days to process your filing.
Be aware that your business name will become available for use by others once your LLC is dissolved.
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 North Dakota’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 making adequate provision for discharging the LLC’s 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 North Dakota 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 get assistance from a local business attorney.
Articles of Termination
Regardless of whether the winding up of your business includes notifying your creditors, sooner or later 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 effective date for the articles of termination may be up to 30 days after the filing date.
There is a $20 fee to file the articles by mail. Typical processing time is the same as for the notice of dissolution.
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
North Dakota does not require you to obtain clearance from the Department of Revenue in order to dissolve your LLC.
For federal tax purposes, 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 some forms for the notice of dissolution and articles of termination, as well as information on mailing addresses 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.