Closing your Georgia 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. (In Georgia, closing an LLC is also frequently referred to as termination of an LLC.)
Your LLC is registered with the State of Georgia. Officially ending its existence as a state-registered business entity, and putting it beyond the reach of creditors and others claimants, begins with a formal process called "dissolution." While an LLC may be involuntarily dissolved through a court decree, or for administrative reasons such as failing to file an annual registration or pay a required fee or penalty, 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 articles of organization and 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.
Also, unless your articles of organization or operating agreement state otherwise, Georgia's LLC Act allows for an alternative method to voluntarily dissolve an LLC: approval by all LLC members.
For either approach to dissolution of your LLC—relying on rules in formational documents or unanimous written consent—you should make sure to record the decision to approve the dissolution in the official minutes of the dissolution meeting or on a written consent form.
Georgia law gives you the option to file a statement of winding up with the Secretary of State ("SOS"). This can be a very simple document providing the name of the LLC and a statement that the company has dissolved and commenced winding up activities. You need to file the statement in order to be able to give notice of the dissolution of your LLC to creditors and other claimants. (Giving notice is discussed below.) You should consider getting assistance from a local business attorney to properly draft and file this document.
Following 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.
Compared to many other states, Georgia's LLC Act contains little information about what's involved within winding up. Other states refer to activities such as collecting LLC assets and resolving legal and other disputes involving the company. The two points the Act does focus on are:
One other key task is giving notice to creditors and other claimants of your LLC's dissolution. In Georgia, so long as you've filed a statement of commencement of winding up, you have the option to give notice. While you are not required to give notice, doing so will help limit your liability and also allow you to more safely make final distributions to members.
Under Georgia law, one way to give notice is by sending a written document directly to known claimants after dissolution. Proper written notice must:
You also may 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, including rules about which newspapers you can use to publish the notice. Generally speaking, claimants have two 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.
After dissolving your LLC, you should file a certificate of termination with the SOS. Georgia does not require you to file this type of final document, instead stating that an LLC "may" file the certificate. However, it is generally advisable to file a certificate of termination. (If you have specific questions about whether to file, you should contact a local attorney.)
To complete the certificate of termination, you must provide:
Note that your LLC must be active and in good standing with the SOS in order to terminate.
There is no fee to file the certificate. Your filing usually will be processed within 7-10 business days. Expedited processing is available for an additional fee. A certificate of termination form is available for download from the SOS website.
Be aware that your business name will become available for use by others after termination.
Georgia 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 (if your LLC is classified as a partnership for tax purposes) or IRS Form 1120 (if your LLC is classified as a corporation for tax purposes).
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 forms, filing fees, and mailing addresses, 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.