Closing your Georgia limited liability company (LLC) will involve a variety of tasks. Among the most important are what's known as "dissolving and winding up" the business. Importantly, you'll file a form with the Georgia Secretary of State at the end of the dissolution process and at the end of the winding-up process.
This article covers information specific to dissolving and winding up your Georgia LLC. Key elements of the dissolution procedure are laid out in the following sections of Georgia law: Ga. Code §§ 14-11-602 and following (2023).
For general step-by-step guidance, see our article on the steps to take to dissolve your LLC.
Your LLC is registered with the State of Georgia. 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 might be involuntarily dissolved by the state or a court, here we're concerned with voluntary dissolution by the LLC owners (called "members").
Dissolving your business refers to the process of voting to end your LLC and filing the appropriate paperwork with the Georgia government.
Winding up your business refers to the process of:
To voluntarily dissolve your LLC, you first should look at the company's formational documents:
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. For example, your operating agreement might require two-thirds of the LLC members to vote to approve the dissolution for the vote to pass.
Make sure you follow any specific procedural requirements that might 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.
Georgia's LLC laws. If your articles of organization or operating agreement don't specify when and how the LLC can be dissolved, you'll need to apply Georgia's default rules for LLCs. Under Georgia law, you can dissolve your LLC with the unanimous consent of all LLC members. (Ga. Code § 14-11-308 (2023).)
Recording your decision to dissolve. For either dissolution approach—relying on rules in formational documents or on unanimous consent—you should make sure to record the decision to approve the dissolution. You can record this action in the official minutes of the dissolution meeting or on a written consent form.
Note that if you have any legal actions or proceedings filed by or against your business, dissolving your LLC doesn't stop these actions.
After taking the necessary action to dissolve your LLC, file a statement of commencement of winding up with the Georgia Secretary of State (SOS). While filing the statement isn't required, it's a good idea to have it on record with the state.
The statement of commencement of winding up will contain basic information about your LLC, including:
(Ga. Code § 14-11-606 (2023).)
The statement must be signed by an authorized individual, such as an LLC member or legal representative. As of 2023, there's a $10 fee to file the notice on paper but no charge to file online. For paper filings, the SOS has a statement of commencement of winding up form available for download. The downloadable form includes places for additional information, such as the number the SOS assigned to the LLC when it was formed. For online filings, go to the website of the SOS corporations division.
Georgia doesn't require you to obtain tax clearance before dissolving your LLC. However, it's a good idea to file the following tax-related documents as part of dissolving your LLC:
When you file your federal tax return, 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).
Following the vote to dissolve your LLC and filing the statement of commencement of winding up, the company continues to exist for the purpose of taking care of final matters that, collectively, are known as "winding up" the company. You'll probably designate one or more LLC members or managers to handle the winding up.
Under Georgia's LLC laws, key winding-up tasks include:
(Ga. Code § 14-11-605 (2023).)
Georgia law requires you to take these actions as you wind up your LLC. Moreover, these tasks are natural and important steps in closing your business. Avoiding any of them can put you and your business at risk—financially and legally.
Unlike many other states, Georgia law doesn't clearly require you to distribute LLC assets in a particular order. However, you should try to make sure all outstanding debts are paid before paying anything to the LLC members.
For example, suppose Rugged Management is a Georgia LLC that has three members: Bella, Delia, and Corey. The three members have equal membership interests and all agree to dissolve the business. After liquidating its assets, the company has $100,000 to distribute. First, the LLC must pay off its creditors. So, the business pays the remaining $10,000 on a loan and $5,000 in taxes, leaving $85,000.
Second, each member is owed $5,000 in distributions. Third, the company must pay Corey back for the $10,000 he contributed to the business when it first started out. Fourth, the LLC can distribute the remaining $60,000 to the members in proportion to their membership shares. Because the members have equal interests, each member will receive $20,000.
While you're required to pay (or make arrangements to pay) your creditors and are commonly expected to do so before making any other distributions, your operating agreement might provide a different structure or order for those other distributions.
Unlike some other states, Georgia doesn't require LLCs to notify creditors of the company's dissolution. Even though it's not required, you should let creditors know that you're planning on or have dissolved your LLC. In your notice, you should tell your creditors that they should submit any claim against your LLC to a specified address by a specified date. The date can't be less than six months from the date of the notice. Other rules also apply. (For more details, check Ga. Code § 14-11-607 (2023).)
You should also put a notice of your LLC's dissolution in a local newspaper. Again, while not required, publishing a dissolution notice can help protect you from liability. For example, a creditor probably couldn't argue that you intentionally avoided paying a debt by secretly dissolving your business if you published your dissolution in the newspaper. (For more details about Georgia's notice publication rules, check Ga. Code § 14-11-608 (2023).)
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 a:
If you don't file the additional termination forms, you'll continue to be liable for annual report fees and minimum business taxes.
Georgia doesn't require a general business license. But depending on your business and profession, you might be required to have different licenses and permits. You should cancel any licenses, permits, and registrations associated with your business. You might be able to sell or transfer some permits.
You also need to close any bank accounts in your business name. In addition, make sure to end or settle any contractual obligations. You might be able to assign your contract rights and obligations to someone else.
When all of the property and assets of your LLC have been properly distributed, you need to cancel your articles of organization by filing a certificate of termination with the SOS. The certificate of termination will contain:
As with the statement for winding up, the certificate of termination must be signed by an authorized individual, such as an LLC member or legal representative. As of 2023, the fee to file on paper is $10 but there's no fee to file online. The downloadable form includes places for additional information, such as the effective date for termination. For online filings, go to the website of the SOS corporations division.
Be aware that your business name will become available for use by others once your LLC is dissolved.
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, see our checklist for closing your business and read about what you need to know about closing a business.
If you have further questions or need legal assistance, you should talk to a Georgia business attorney. Many business owners can dissolve their LLCs on their own. But you might want to seek legal help if there are disagreements among members, complicated debt settlement negotiations, or ambiguous contract assignment terms.