How Do You Dissolve an LLC in Massachusetts?

Find out how to go about dissolving an LLC in Massachusetts, including filing a certificate of cancellation, settling debts, and distributing assets.

By , Attorney
Updated by Amanda Hayes, Attorney · University of North Carolina School of Law

When it's time to close your Massachusetts limited liability company (LLC), you'll need to undertake a variety of tasks. The central tasks are what's known as "dissolving and winding up" the business.

This article covers information specific to dissolving and winding up your Massachusetts LLC. Key elements of the dissolution procedure are laid out in the following sections of Massachusetts law: Mass. Gen. Laws ch. 156C, §§ 43 and following (2023).

For general step-by-step guidance, see our article on the steps to take to dissolve your LLC.

Dissolving Your LLC in Massachusetts

Your LLC is registered with the Commonwealth of Massachusetts. 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 Massachusetts government.

Winding up your business refers to the process of:

Review Your LLC Articles of Organization and Operating Agreement

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.

Massachusetts'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 Massachusetts's default rules for LLCs. Under Massachusetts law, you can dissolve your LLC with the written consent of all the LLC members. (Mass. Gen. Laws § 43 (2023).)

Recording your decision to dissolve. For either dissolution approach—relying on rules in formational documents or on the consent of a majority of the LLC members—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.

Do You Need to Obtain Tax Clearance Before Dissolving Your LLC?

Massachusetts doesn't require you to obtain tax clearance before dissolving your LLC. Nevertheless, 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).

Winding Up Your LLC in Massachusetts

Following the dissolution of your LLC, 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 Massachusetts's LLC laws, key winding-up tasks include:

  • prosecuting or defending any outstanding lawsuits (whether civil, criminal, or administrative)
  • settling and closing the LLC's business (including ending any active contracts)
  • disposing of and transferring company property
  • discharging or making reasonable provision for the LLC's liabilities, and
  • distributing the remainder of the LLC's assets to the members.

(Mass. Gen. Laws § 45 (2023).)

All of these tasks are natural and important steps in closing your business. Moreover, avoiding any of them can put you and your business at risk—financially and legally.

Settling Debts and Distributing Assets

When settling your company's debts and distributing its assets, Massachusetts law provides a particular order for payments to be made:

  1. to creditors (including members who are creditors)
  2. to each member who's owed a distribution
  3. to each member who made a contribution to the LLC that hasn't been repaid, and
  4. to members according to their respective rights and interests.

(Mass. Gen. Laws § 46 (2023).)

In general, you must pay your debts first. But your operating agreement can provide for a different distribution order for the LLC's remaining assets. For example, after you pay your creditors, your operating agreement might require you to pay back members for their contributions before you pay out any distributions.

For example, suppose Ninja Turtle LLC is a Massachusetts LLC that has four members: Raphael, Donatello, Leonardo, and Michaelangelo. The four 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 an equipment loan and $10,000 in taxes, leaving $80,000. None of the members are owed distributions. So, second, the company must pay Michaelangelo back the $20,000 he contributed to the business when it first started out. Third, the LLC can distribute the remaining $60,000 to the members according to their respective rights and interests. Because the members have equal interests, each member will receive $15,000.

Notifying Creditors of Your LLC's Dissolution

Unlike some other states, Massachusetts doesn't require LLCs to notify creditors of the company's dissolution. While not required, you should let creditors know that you're planning on or have dissolved your LLC. In your notice, let creditors know that they should submit any claim against you to a specified address by a specified date.

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.

Canceling Out-of-State Registrations and Other Licenses and Permits

If your LLC is registered or qualified to do business in other states, you must file separate forms to terminate your right to conduct business in those states. If you don't file the additional termination forms, you'll continue to be liable for annual report fees and minimum business taxes.

Depending on your business, location, 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.

Certificate of Cancellation

After you have voted to dissolve your LLC and completed winding it up, you must file a certificate of cancellation with the Secretary of the Commonwealth ("SOC"). You must be up to date with your annual reports and fees before the SOC will accept your certificate.

The certificate of cancellation will contain basic information about your LLC, such as:

  • the filing date of its certificate of organization
  • the reason for filing the certificate of cancellation; and
  • the effective date for the certificate of cancellation if other than the filing date.

The certificate must be signed by an authorized individual, such as an authorized LLC manager or member. The SOC doesn't have a certificate of cancellation form available for download. However, there's an online filing system that you can use to create and submit your certificate. As of 2023, the fee to file the certificate is $100.

Be aware that your business name will become available for use by others once your LLC is dissolved.

Additional Guidance on Dissolving Your LLC

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 Massachusetts 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.

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