Key Takeaways

  • An LLC's business bank account can be used only for winding-up activities after dissolution.
  • The account should remain open until all debts, taxes, and obligations are paid.
  • Closing the business bank account helps prevent personal liability.
  • Federal and state agencies must be notified, and final tax returns filed.
  • Funds remaining after all obligations should be distributed among LLC members.
  • A step-by-step process should be followed to formally close the account with your bank.

A dissolved company bank account can be used for certain tasks when winding up your company. After you have completed the dissolution process, however, the account will no longer be accessible.

Using Your LLC Bank Account After Dissolution

After dissolving a limited liability company (LLC), it's common for business owners to wonder if their business bank accounts will remain active. Your company's bank account will remain active for as long as it takes to wind up your company, and the funds in your account are available for any associated costs. You won't, however, be able to use your account for any new business.

Your LLC will form under state law, and these laws will also dictate how you can end your company. Dissolution is the act of closing an LLC, and you must be sure that you're following the proper steps in order to satisfy all of your obligations and debts.

If you want to end your company, your first step should be researching the LLC statutes in your state. In your state's statute, you should be able to find the steps you will need to complete to end your company. The general steps for LLC dissolution are as follows:

  • Your LLC members make the decision to end the company and vote on its dissolution.
  • You file dissolution paperwork with your state.
  • You sell company assets and use the proceeds of the sale to settle outstanding debts.
  • You pay your company's remaining taxes.

IRS and Tax Considerations When Closing Your Business

When closing your business and preparing to close the business bank account, it’s essential to ensure all federal and state tax obligations are addressed. According to the IRS, business owners must:

File a final income tax return and check the “final return” box.Pay any outstanding payroll taxes and file final employment tax returns (Form 941 or 944).Report the sale of business property, if applicable, using Form 4797.Cancel your Employer Identification Number (EIN) by sending a letter to the IRS that includes the full legal name of the business, the EIN, the business address, and the reason for closing the account.These tax-related responsibilities should be completed before closing your LLC’s business bank account. Otherwise, you may run into issues when trying to resolve obligations post-closure.

If your LLC collects sales tax, be sure to file a final sales tax return and notify your state tax agency to cancel your sales tax permit.

Articles of Dissolution and Winding Up

Every state will have its own rules for ending an LLC, but in the majority of states, you will need to file Articles of Dissolution, or Articles of Termination. Establishing the end date of your LLC is the most important part of this document. While your end date can be the same day you file your Articles, you may want to give yourself a little extra time to wind up your company.

Some companies choose to file their Articles of Termination after the winding up process is complete, while others file their Articles right away and list a future end date.

Members of the LLC will have a certain period of time to wind up company affairs after dissolution has occurred. The main focus of the winding up process is resolving your company's remaining debts and liabilities. If your company is involved with any lawsuits, you will need to deal with these suits as part of the winding up process.

Your LLC members should maintain your company bank account for a period of time. You should make sure that your account contains enough money to settle your remaining debts, including those of which you may not be currently aware. If you discover a creditor after your company has dissolved, and your bank account does not have enough money to pay the creditor, they might be able to pursue LLC members' distributed assets to satisfy the debt.

After dissolution, you cannot use the funds remaining in your business bank account for new business. LLC members no longer have the authority to conduct business or do anything that would indicate that the LLC is still active. Your bank account can cover only essential winding up affairs.

How to Close a Business Bank Account Properly

Once the Articles of Dissolution are filed and the winding-up tasks are complete, the next step is to officially close the business bank account. Here’s how to close a business bank account effectively:

  1. Confirm All Payments Are Complete
    Ensure all outstanding checks have cleared and any automatic payments or withdrawals are canceled. You don’t want unexpected fees or transactions after closure.
  2. Distribute Remaining Funds
    After paying debts and taxes, distribute any remaining funds to LLC members according to their ownership interests.
  3. Gather Required Documents
    Most banks will ask for documentation to close the account, which may include:
    • A copy of your Articles of Dissolution or Termination.
    • A resolution or letter signed by LLC members authorizing the account closure.
    • Identification of the authorized account signer.
  4. Visit the Bank or Contact Your Banker
    Some banks allow closures in person, while others may permit online or written closures. Follow your bank’s specific procedure.
  5. Obtain Written Confirmation
    Always request and keep a written confirmation or receipt showing that the account has been closed. This documentation is vital for recordkeeping and future tax filings.
  6. Secure Financial Records
    Keep your final bank statements and related documents for at least seven years. These records may be required for audits, legal matters, or IRS inquiries.

Closing the account too early can result in complications if unexpected expenses arise. However, leaving it open too long could risk unauthorized use or expose LLC members to liability.

Questions About Dissolution

When dissolving an LLC, it's common to have questions about the process, including what happens to your bank account. For instance, many people want to know if they can leave their company bank account open after the company's dissolution. When you end your LLC, you must dissolve the company completely, which means that you will need to close your bank account after winding up your business.

All of your company's assets should get distributed and your liabilities settled. If there is money left in your account after paying all of your creditors, the remaining funds should get distributed to your LLC's members based on their ownership percentage.

Your bank probably won't keep track of your LLC's status, so you will need to directly request that the bank close your account when your company is dissolved. Leaving your account open may expose you to personal liability, so you should make sure to close it.

Notifying State and Local Agencies

In addition to notifying the IRS, you must alert your state and local agencies that your business is closing. Requirements may vary by state, but typically include:

  • Filing a final state tax return.
  • Canceling any business licenses or permits.
  • Informing the state labor agency if you had employees.
  • Canceling your state EIN or tax ID number.

Neglecting these steps can lead to penalties or continued tax liability. Check with your Secretary of State’s office or Department of Revenue for specific guidance.

Frequently Asked Questions

Can I keep my business bank account open after dissolving my LLC?No. While the account may stay open temporarily to pay final expenses, it should be closed once all liabilities are resolved to avoid legal risk.

What documents do I need to close a business bank account?You typically need your Articles of Dissolution, a closure authorization from members, and a valid ID.

What happens to leftover money in the business bank account?The remaining funds should be distributed to LLC members based on their ownership percentages after all debts and taxes are paid.

When should I close the business bank account?Close it after the winding-up process is complete and all financial obligations are settled.

What if a creditor appears after the account is closed?LLC members may be personally liable if the funds were already distributed and the debt remains unpaid. It's advisable to keep the account open until you're confident all claims are resolved.

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