1. The Winding Up Process
2. Tax Implications when Dissolving an LLC
3. Dissolution Time

How to dissolve an LLC in Virginia starts with notifying the Virginia State Corporation Commission of the plans to end all business operations. The State of Virginia calls this process a Virginia LLC dissolution. The Virginia secretary of state must also confirm that all outstanding obligations have been completed. This includes all paperwork such as the articles of cancellation and any outstanding fees or penalties due to the Virginia Corporation Commission.

The Winding Up Process

After an LLC is formed, it is required to file and pay taxes and file any required reports. If this is not done, penalties and fees will be assessed to the LLC. This is just one reason why an LLC needs to be formally dissolved in order to close a business. As you begin to dissolve the LLC, you start what is known as the winding up process.

If an LLC is dissolved prior to actually taking part in any business transaction, the process will be simple. If dissolution takes place with an active LLC, the process will include dealing with distributing assets and paying back any debts and liabilities. To begin dissolving the company, follow these steps:

  1. The members of the LLC must meet to record and vote on the decision to dissolve.
  2. Minutes of the meeting should be recorded and kept with the business records.
  3. If the LLC does not have members, the organizer(s) must apply for dissolution.
  4. All annual registrations or reports must be filed with the Virginia State Corporation Commission.

When submitting the articles of cancellation, the State of Virginia requires they are sent in by mail. Along with the meetings and paper requirements, there are steps in regards to the financial aspects of the LLC. To properly close the LLC, you must:

  • Eliminate any outstanding debts.
  • Notify creditors of the plan to dissolve. This is required in Virginia.
  • Include a mailing address and a deadline to submit any outstanding claims when notifying creditors.
  • Place a public notice of dissolution in a newspaper or public outlet. While this is not required in Virginia, it is recommended as a way to prove notification was given if a claim is made against the LLC after dissolution is complete.
  • Pay all outstanding taxes and administrative fees. Dissolution will not be approved if outstanding debts exist.
  • Notify in writing or in-person at the city or county Commissioner of Revenue that the LLC is dissolving.
  • Notify Any agencies that handle state licensing or permits that the company is going out of business. In some cases, the agency will request you to file a form to terminate the business license.
  • Distribute any remaining assets based on the members' ownership interests in the LLC. All assets that members take ownership of must be reported to the Internal Revenue Service.
  • Close all business bank accounts. If this is not completed, legal problems may appear in the future in regard to liability and obligations that come with a business bank account.

Tax Implications when Dissolving an LLC

Most LLCs that are dissolved in Virginia must also file IRS Form 966 with the Internal Revenue Service within 30 days of the dissolution plan being approved. This form will alert the federal government that the LLC is being dissolved so appropriate steps can be taken.

A registration change request, or form R-3, should be filed with the Virginia Department of Taxation. This form, available online, states the effective date of when the LLC will go out of business. If the LLC had employees, a final return must be filed to indicate any income tax withheld and a form W-2 should be completed for each employee. This must be done within 30 days of the month in which wages were last paid.

The IRS account connected to the LLC's EIN must be canceled. The EIN is a number that identifies the LLC in regards to taxes, finances, and other important matters. After dissolution, the EIN will remain with the LLC until the IRS processes the last and final tax return. At this point, the EIN will become inactive.

Dissolution Time

The total time it will take to dissolve the LLC will vary based on the time it takes to complete the required steps, from when the meeting to dissolve takes place to when the IRS processes the last tax return. After these steps are completed, The Virginia State Corporation Commission will process the articles of cancellation in approximately seven to 10 days.

If you need help with how to dissolve an LLC in Virginia, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.