To dissolve a limited liability company one has to take up a set of required steps. In Alabama, if you and the members of the LLC want to discontinue business, then it is necessary to dissolve their business legally to avoid any administrative and legal consequences. To dissolve an LLC in Alabama, you are required to submit a complete Article of Dissolution to the Secretary of State. Before submitting the Article of Dissolution, one must follow the operating agreement.
If you have an Alabama LLC (domestic or foreign) you must have an operating agreement. The first step towards the dissolution of Alabama LLC is to follow the operating agreement. There are some points to be noted before proceeding with the official paperwork. At first, make sure all the members of the LLC are agreed to dissolve the business. Once all the members are ready, their consent should be recorded via voting. After casting their vote in favor of the dissolution, the legal process must be started. Here are the steps to address for dissolving Alabama LLC.
On this page, you’ll learn about the following:
- How to Dissolve an LLC in Alabama
- After Dissolving Your LLC
- Reasons Behind Dissolving Alabama LLC
- Alabama LLC Dissolution Review
How to Dissolve an LLC in Alabama
Dissolution of Alabama LLC requires three broad procedural steps. Having an Alabama LLC Operating agreement, close all the tax accounts, and finally submit the Articles of Dissolution form to the Alabama Secretary of State.
Step 1: Follow Your Alabama LLC Operating Agreement
When you have started an LLC as a business entity, then there is an operating agreement that is formed. There are complete details of how the company will function and grow in that operating agreement, which acts as a comprehensive guide. There is also a dissolution process, which is added to your agreement. The common dissolution steps that almost every LLC follows are:-
First of all, the dissolution vote will take place among the LLC members in the dissolution meeting. If the majority is with the YES, then the process goes into legal proceedings.
- All the dissolution votes will be noted down and recorded with the minutes of the meeting or a consent form.
- After that, a formal date for dissolving the LLC will be decided.
- The next step is counting the LLC assets and dividing them among the stakeholders and members accordingly.
- Finally, the creditors of the business are notified, and the debts of the business are settled.
This is a general process. However, it is strongly recommended to seek professional help to avoid any complications when it comes to terminating an LLC.
Get a Professional Agent Service
When it comes to a limited liability company dissolution, it is important to get professional help. The Alabama registered agent will guide you with everything you need to close your limited liability company. While choosing a registered agent make sure they have a physical street address in the state. A professional service provider helps you to file the Article of Dissolution and close your various tax accounts without any hassle. Below are the best LLC services we strongly recommend for you.
Step 2: Close All Tax Accounts
Every action that an official business takes is legally bound to some minimum business taxes. For that, various accounts are maintained by the state government with the help of various departments. You should consider all the taxes that you have paid for your LLC’s duration and make a list of them.
You must contact all government entities and clear the amount of outstanding taxes due until the date you have decided for dissolution. All the taxes must be paid in advance so that you don’t face any issues in the further process of shutting down your LLC.
Some of the common taxes that limited liability companies have to pay are:
- Unemployment insurance tax
- Employee withholding tax if your LLC has employees.
- If your LLC is engaged in selling taxable goods then they are liable to pay the sales and use tax.
Most of these taxes are normally filed, but some departments require official paperwork, without which it is impossible for the business to close accounts. Apart from business taxes, federal taxes, personal income taxes, and franchise taxes are to be considered. For the franchise taxes, a franchise tax form is required.
That is why the LLC owner should go through the sales tax guide and hire an accounting service. If you want to do the accounting yourself or make accounting easy, try FreshBooks.
While dissolving the Alabama LLC, the owner does not require to obtain a tax clearance certificate. However, if you have filed federal taxes, then you must go through the final return option on your IRS form.
Step 3: File Articles of Dissolution
There is a list of dissolution documents that you, as an LLC owner, have to file. Once these articles are filed, the legal existence of the LLC will be over. Like an Alabama Certificate of Formation, one has to file an Article of Dissolution. The dissolution procedure and filing the articles of dissolution form is very easy and is discussed below.
- First of all, the LLC owner(s) has to file the Article of Dissolution. There is only one method of filing available, i.e. file by mail. To get the application form you need to visit the Secretary of State Website of Alabama state.
- In that particular SOS website, the LLC owner has to look for the Domestic LLC Articles of Dissolution page.
- If you want to dissolve Alabama Foreign LLC then look for Foreign LLC Dissolution process.
- There is a form available on this page, which is the article of dissolution you are looking for. You have to download that pdf form and start filling it.
- You must fill in all the important and legal information in the form, so you should be extra careful.
- After filling in all the important information, you must choose the mode of payment you want to use to pay the LLC dissolution filing fees.
- After filling in every detail, one should submit the form through an official mail address and make a payment.
Office of the Judge of Probate in the county that the LLC’s Certificate of Formation was recorded.
Filing Fee: $100
The LLC you owned is dissolved, and you are free from all the liabilities linked with the LLC and its taxes. A copy of both original articles and recorded articles should be submitted in front of the probate judge. Now it’s his call that he accepts your expedited dissolutions or not.
Points to Be Noted When Dissolving Alabama LLC
Apart from these three steps, no major dissolution rules are there in Alabama. However, there are some other tasks one has to keep in mind while dissolving an LLC legally.
There are some purposes of LLC that require some attention even after dissolution, known as winding up. The task of winding up includes.
- For a certain period, the property of a business requires preservation.
- If there is any civil case against the LLC, then the owner needs to finish them.
- Settle all the existing disputes of LLC.
- Transfer all the property of LLC to the names of partners.
- Release all the liabilities that the LLC owes to others.
- Rightful distribution of all the assets among members, according to their percentage of partnerships.
Cost of Dissolving LLC
LLC cost in Alabama includes the formation as well as dissolution fees. To dissolve an LLC in Alabama, LLCs have to file an Article of Dissolution. The filing fee is $100. The details are mentioned on the second page of the article dissolution filing form. Following are the ways to pay for the dissolution,
- You can select a payment pick-up option.
- There is an option of direct account transfer through your prepaid accounts.
- LLC owners can also use their Credit cards, providing their complete details and types. Along with that, an original signature is required to authorize the transaction state will make.
After Dissolving Your LLC
After you formally dissolve your LLC, your business name will not be reserved anymore. Any other business entity will be eligible to use your Alabama LLC name immediately after 120 days of dissolving your LLC. On the other hand, if you have a foreign LLC in other states, then you must comply with the SOS of the state after the dissolution of your LLC in Alabama. A registered agent can help you do the needful.
Reasons Behind Dissolving Alabama LLC
There are many reasons behind the process of actually dissolving the LLC if you are no longer in the business. Some of the prominent ones are mentioned below.
- If you are not legally dissolving your LLC, your business is still operating according to the government agencies. That is why your business will be liable to pay some outstanding taxes, which will be levied no matter you are active or not.
- With taxes, some severe penalties can also be charged against your business, which you have to pay as a shareholder. Dissolution will save you from such a penalty.
- Your individual liability of the person will decrease as you legally apply to dissolve your LLC.
- There is a chance of corporate identity theft of the business owners if none of you dissolves your LLC amid inactivity.
- The LLC can be exposed to creditors and lawsuits if it is not properly dissolved.
- Your LLC will stay in the list of the state filing list due to which one has to pay charges to the state for operating in their region.
- If an LLC is part of some franchise chain, then they need to file for dissolution as the franchise tax they have to pay will be very hefty for their pockets.
By now, you must have understood why you must dissolve your LLC. So, let us jump directly to dissolution procedures.
Top Businesses To Look For in Alabama!
When we talk about Alabama’s top businesses, we look for the businesses that impact economic growth. If the industry impacts positive growth, it is better to go for it and make a better fortune. So here are some of the top businesses if you want to start an Alabama LLC!
- Manufacturing: If we talk about the companies working as manufacturing companies, they are producing more growth. This specific sector comes on the top with constituting $37 million in annual GDP. There are so many things that need to be manufactured and give growth to the state.
- Health care: It is the most crucial thing for health centers and health insurance for people. There was a time when Alabama was known to have the least amount of health insurance. Right now, it weighs more than $16 million in the annual GDP.
- Retail trade: Retail trade is an important sector that we consider in Alabama’s economy. For those who want a good economy and a flexible market, then it is the best sector. It represents $15 million annually in the GDP.
- Agriculture: Even though we know that other non-agricultural ways make the most of the state. But if we look at agricultural production that seems vital. The sector’s percentage is 4.9% in the entire yearly GDP. It generates an amount of more than $5 million yearly.
Alabama LLC Dissolution Review
Time needed: 5 minutes.
Here’s a recap of the steps you must follow when dissolving your Alabama LLC. Click on the steps in this list if you want to read the full detail.
- Follow Your Alabama LLC Operating Agreement
Remember that when you started, you created an operating agreement. Use this agreement as a guide in proceeding with the dissolution of your LLC.
- Close Tax Accounts
Make sure you close all your tax accounts to avoid incurring further costs.
- File Articles of Dissolution
File the article of dissolution to make it known to the state where your LLC operates that you are indeed no longer in business.
What is the Cost to Dissolve an LLC in Alabama
To dissolve an LLC in Alabama you need to file the Articles of Dissolution with the Alabama Secretary of State via mail and pay a filing fee of $100.
You can ask yourself this question: What is the cost to dissolve an LLC in Alabama? The answer to this question depends on your type of LLC. Nonprofit entities require a different form than for-profit entities. Alabama has a variety of dissolution rules, and noncompliance can lead to serious legal consequences. In most cases, dissolving an LLC is an easier process than forming a new one.
If you have decided to dissolve your LLC, you’ll need to file Articles of Dissolution with the Secretary of State in the county where you filed the Certificate of Formation. The Secretary of State charges $100 to dissolve an LLC. The Judge of Probate requires a separate $50 fee for dissolving an LLC. In Alabama, the Secretary of State requires at least 50 percent of the business’s revenue to dissolve an LLC.
In Alabama, a business must pay business privilege taxes. If you fail to pay these taxes, you may be forced to pay a penalty of up to 50% of the unpaid tax amount. The penalty fee increases every month by 1%. If you fail to file a return on time, you risk getting into legal trouble and paying penalties. To avoid the legal consequences of not dissolving your LLC, make sure to consult with your attorney or accountant.
There are several ways to dissolve an LLC in Alabama. You can file the dissolution documents yourself, but it is usually better to hire a professional service provider to handle the process. Many of these companies will prepare your Articles of Dissolution for you. There is a fee associated with this process, but the cost is usually not more than $100. The dissolution process should only take a couple weeks to complete.
Once you’ve decided to dissolve your LLC in Alabama, you must complete a series of procedural steps. First, you should close the operating agreement and file it with the state. Second, you should choose a date for dissolution, and third, you must divide the remaining assets among the LLC stakeholders. It’s important to consider how much money you’re willing to spend on this process to get your business back up and running.
You should know that dissolving an LLC in Alabama is a complex process and involves several steps. If you want to remove yourself from liability, lawsuits, and other potential pitfalls, dissolving your LLC is an option. You can hire a Business Filing Services Company to perform this procedure for you. Depending on whether you’ve issued any shares, Alabama law requires you to submit an Article of Dissolution.
You must also file an Application for Certificate of Compliance with the Alabama Department of Revenue. This document will prove that your LLC has paid the required taxes. The Certificate of Compliance requires you to pay a fee of $14. Another fee you must pay to the state of Alabama is an Application to Register a Trademark and Trade Name. The Trade Name filing requires you to pay an additional $30. After you’ve filed these documents, you’ll need to file your Certificate of Formation with the state of Alabama.
Yes, there is a minimal fee of $100, which Alabama SOS charges to dissolve the legally registered LLC and proceed with the task of removal of their name from every tax list and benefits. Articles of Dissolution must be submitted to the Alabama SOS.
No, there is no requirement of revenue department clearance till the time the SOS of Alabama accepts the dissolution form.
The name will also get deregistered with the dissolution of the LLC. But the name will not be allotted for the next 120 days. After that, if some business wants to name their LLC after the name chosen by you, then it is their choice.
If you have not dissolved your LLC, you are liable for business privilege tax, and if it is not paid on time, you are leveraged with 10% of the amount of tax or $50. After that, the additional penalties will increase by $1 per month. If it goes unpaid for a longer duration, then the chances of seizing your property can also recover the tax.
Yes, if you are dissolving your LLC, you have to pay some amount to the probate judge who was also present during your LLC formation in the probate office. The minimum fee of the judge is $50, which can vary.
Limited liability companies reduce owners’ personal liability. Having an LLC is quite cost-effective. However, if it is required to close down the business, then the dissolution process should be done legally. Get a professional service to get everything done. We hope this article helps you to close your LLC in Alabama. If you have any query do let us know in the comment box.