Key Takeaways

  • LLC dissolution in Utah requires filing Articles of Dissolution with the Department of Commerce.
  • Before dissolution, LLC members should approve the action through a formal vote and record it in meeting minutes.
  • Outstanding debts, taxes, and obligations must be resolved before closing the business.
  • Business licenses, tax accounts, and registrations should be canceled or closed.
  • Utah does not charge a filing fee for Articles of Dissolution, but a $15 fee applies for revocation in certain cases.
  • The process differs depending on whether the LLC has started operations.
  • You may need to submit final reports to the IRS and notify creditors with a deadline to file claims.

Articles of dissolution Utah must be filed to terminate a business entity in the State of Utah. You should file it with the corporations division of the Department of Commerce.

Dissolution is the process of legally terminating the existence of a business entity. The termination process varies depending upon the type of entity.

Utah Law on Articles of Dissolution

Section 48-2c-1204 of Utah Code contains the following provisions relating to articles of dissolution:

After every dissolution other than one falling under section 48-2c-1201(5) or (6), you must file articles of dissolution with the state agency. The articles of dissolution must include the following information:

  • The name of the company
  • The address of the company
  • Date of dissolution
  • Reason for dissolution
  • The statement of members if the dissolution is caused by a written agreement of members
  • Any other information the state agency determines to be necessary.

A company is considered dissolved with effect from the date of dissolution specified in the articles of dissolution.

Articles of Dissolution Fees in Utah

Businesses must file the articles of dissolution with the corporations division of the Department of Commerce. You need not pay any filing fee for submitting the articles of dissolution. However, a filing fee of $15 is applicable for revoking or canceling dissolution by certain entities like domestic corporations, domestic nonprofit corporations, and domestic professional corporations.

How to Dissolve a Limited Liability Company (LLC) in Utah

You form a Utah LLC by filing articles of organization with the state agency (Department of Commerce). On approval of the formation document, the LLC is officially registered with the state government and reporting and tax obligations are created on the company.

Hence, to dissolve a Utah LLC, you must inform the state agency of your intentions to close the company. Unless your LLC's dissolution is approved by the state agency, your company will continue to be responsible for all recurring filings, fees, and penalties.

Note that LLC dissolution is a part of much larger, winding up process. The process to be followed before and after dissolution of your LLC depends upon whether your company has commenced business and the types, number, and value of assets and liabilities your company has. The dissolution process is relatively easier in cases where the company has not commenced its business.

Broadly, following is the process for dissolving a Utah LLC:

  1. Hold a meeting of members and pass a resolution to dissolve the company. Record the minutes of the meeting.
  2. File the annual and other required reports with the state agency.
  3. Pay off all the outstanding business debts of the company. You should give a notice about the intended dissolution to all the creditors of the company. The notice should state the mailing address and deadline to submit any payment claims. You may also want to publish a notice in a local newspaper although you are not legally required to do so.
  4. Pay all the outstanding taxes and fees owed by the company.
  5. File articles of dissolution with the Secretary of State. You can submit this document by mail to Utah Division of Corporations and Commercial Code. There is no filing fee required for filing articles of dissolution. The state agency usually takes five to seven business days to process the articles of dissolution.

Pre-Dissolution Checklist for Utah LLCs

Before formally dissolving your Utah LLC, take the following preparatory steps to ensure a smooth and compliant process:

  • Review the Operating Agreement: Check for any dissolution provisions. If your LLC has one, follow its specific requirements for initiating dissolution.
  • Hold a Formal Vote: Members must agree to dissolve the LLC through a majority vote unless the operating agreement specifies otherwise. Record this decision in the meeting minutes.
  • Document Consent in Writing: If applicable, get written consent from members approving the dissolution.
  • Notify Internal Stakeholders: Inform managers, employees, and contractors of the company’s decision to dissolve.
  • Inventory Assets and Liabilities: Prepare a list of assets and outstanding debts to guide the winding-up process.

Closing Your Tax Accounts

Following are the common types of taxes owed by a Utah LLC:

  • If your company has ever hired employees, employee withholding tax and unemployment insurance tax.
  • If your company has ever engaged in sale of taxable goods or services, sales, and use tax.

You can usually close your tax accounts by filing a final return, but in some cases, you may have to submit some other paperwork. However, you cannot close any tax account without clearing any remaining balance.

Canceling Licenses, Permits, and Registrations

Once you begin the dissolution process, be sure to cancel or allow the expiration of:

  • Business licenses issued by the state, county, or city.
  • Trade names/DBAs registered under your LLC.
  • Utah Department of Commerce registrations, including professional licenses.
  • Industry-specific permits, such as those from the Department of Health or the Department of Environmental Quality.

Check with each issuing authority to determine whether a formal cancellation notice is required.

Further Process of Winding up After Dissolution

  • Distribute all the assets of the company.
  • Close your company's bank accounts.
  • Cancel business licenses and permits.
  • Unless exempted from this requirement, file Form 966 with the Internal Revenue Service (IRS) within 30 days of dissolution.
  • Cancel your company's IRS account associated with the federal employer identification number (EIN). The IRS automatically deactivates your EIN while processing the final tax return but the account associated with the deactivated EIN still remains active. Closing this account linked with your EIN minimizes the chances of any future problems occurring in your EIN account.

Notifying Creditors and Settling Claims

It’s crucial to notify creditors during the winding-up phase:

  • Written Notice: Send a written notice to all known creditors. Include a mailing address where they can submit claims, a deadline (at least 120 days from notice), and a statement that claims will be barred if not received by the deadline.
  • Unknown Creditors: Although not legally required, publishing a notice in a local newspaper can help limit liability from unknown creditors.
  • Dispute Resolution: If a claim is disputed, keep detailed records of the communication and resolution attempts.

IRS and Federal Considerations

In addition to state-level responsibilities, federal obligations include:

  • Filing Final Federal Tax Returns: Indicate that the return is final and report asset distribution where applicable.
  • Filing Form 966 (if incorporated): Although LLCs typically do not file this form, it may be necessary if your LLC was taxed as a corporation.
  • Canceling Your EIN: Write to the IRS with your EIN, business name, and reason for closure to formally cancel your EIN account.

Failure to handle these federal steps can result in IRS confusion or penalties down the line.

What Happens If You Don’t Properly Dissolve Your LLC

If you fail to properly dissolve your LLC in Utah:

  • Ongoing Compliance Obligations: The LLC remains active in the eyes of the state, which means you must continue to file annual reports and pay renewal fees.
  • Accrued Penalties: Missing filings or tax payments can lead to accumulating fines and interest.
  • Legal and Financial Liability: Members or managers may remain liable for debts or lawsuits if the LLC is not legally dissolved.
  • Involuntary Dissolution: The state may eventually dissolve your LLC administratively, but this does not release you from obligations and can damage your business reputation.

Frequently Asked Questions

  1. Is there a fee to dissolve an LLC in Utah?
    No, Utah does not charge a filing fee to submit Articles of Dissolution. However, there is a $15 fee for revoking a dissolution in certain entity types.
  2. Do I need to publish a notice to creditors when dissolving my LLC?
    No, publication is not required by law, but it is recommended to notify unknown creditors and limit liability.
  3. Can I dissolve my Utah LLC online?
    Yes, you can file Articles of Dissolution online through the Utah Department of Commerce website.
  4. What happens to business assets during dissolution?
    Assets must first be used to pay off debts. Any remaining assets are distributed to LLC members in accordance with the operating agreement or Utah law.
  5. How long does it take for the state to process Articles of Dissolution?
    Typically, the Utah Division of Corporations processes the dissolution in 5 to 7 business days.

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