Closing your Oklahoma 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 Oklahoma. 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 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, regardless of whether there are dissolution provisions in your operating, Oklahoma’s LLC Act provides for an alternative method to voluntarily dissolve an LLC: written consent of all LLC members. (If there is more than one class or group of members, then written consent of all of the members of each class or group is required.)
Regardless of whether you dissolve the LLC based on rules your operating agreement or on unanimous written 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.
Articles of Dissolution
Following your taking the necessary action to dissolve your LLC, you must file articles of dissolution with the Secretary of State (SOS). The articles of dissolution will contain basic information about your LLC, including:
- its name
- the date of filing articles of organization
- the reason for filing articles of dissolution; and
- the effective date of dissolution if later than the filing date.
The articles must be signed by a manager of the LLC. There is a $50 fee to file the articles. Your filing should be processed within about one week. You may pay an additional fee for expedited processing. The SOS has an articles of dissolution form available for download.
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 Oklahoma’s LLC Act, key winding up tasks include:
- prosecuting and defending suits
- settling and closing the business of the LLC
- disposing of and transferring LLC property
- discharging the LLC’s liabilities; and
- distributing any remaining assets to LLC members.
When it comes to the last two listed items, discharging liabilities and making distributions to members, note that you are required to make payments in a particular order. First, you must pay creditors, including LLC members who are creditors, to the extent permitted by law. (It is particularly important that you pay all outstanding taxes.) Next, unless your articles of organization or operating agreement provide otherwise, you should make any previously agreed upon distributions to current and former LLC members. Finally, if any assets still remain, and unless your articles of organization or operating agreement provide otherwise, you should (a) return to members any contributions they made to the LLC that were not previously returned; and then (b) make distributions in accordance with each member’s respective membership interests and in proportions in which the members share in distributions.
Oklahoma 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 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, including an articles of dissolution form, 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.