PA LLC Dissolution: Everything You Need to Know
The process of PA LLC dissolution must take place before this type of business entity can be officially and legally closed down.3 min read
How to Dissolve an LLC in Pennsylvania
When the owners, called members, of an LLC in Pennsylvania wish to dissolve the business, they will go through a process called LLC dissolution. If any of the following events occur, an LLC can be dissolved:
- All members unanimously consent to dissolve the business in writing
- Certain events take place as specified in the LLC's operating agreement or certificate of organization
- A member executes an assignment for the benefit of creditors
- A member becomes bankrupt
- A member resigns, is expelled, retires, or passes away
In some cases, the members will have 90 days following an event to continue the business operations. The operating agreement of the LLC may outline what will happen in each specific circumstance as well. If the proceedings for each circumstance are not dissolution, per the operating agreement, the process of automatically dissolving the business will not take place.
If you do choose to close an LLC operating in the state of Pennsylvania, you will need to complete several crucial tasks. Two of the most important are referred to as winding up and dissolving the LLC.
After you register your LLC with the Secretary of the Commonwealth, the business becomes responsible and liable for certain obligations with the Pennsylvania Department of Revenue and the Secretary of the Commonwealth. Failure to pay taxes or file required reports could result in penalties being imposed on the LLC. Those penalties could also incur late fees and fines as time goes on and the LLC doesn't pay or file.
Steps in the Dissolution Process
In order to begin the process of dissolution, the first step is holding a meeting for all LLC members to attend. During this meeting, you can record the resolution to dissolve the business. If there are multiple members, the meeting will need to include a vote in which all members can decide whether the business should be dissolved. During the meeting, you will need to take a vote and record the resolution for LLC dissolution. If you are the only member of the LLC, you can simply complete the resolution yourself.
After receiving a unanimous agreement from all members to dissolve the business, the next step is closing all business tax accounts. In Pennsylvania, unique tax requirements must be fulfilled before an LLC can be dissolved. You will need to pay all outstanding and required taxes to the state. The Department of Labor and Industry and the Department of Revenue will provide clearance that will allow you to continue with the dissolution process.
Next, you'll need to make sure any business debts that belong to the LLC have been cleared up. Send notice to all creditors of your LLC that outlines the pending dissolution. This notice should also include a mailing address where creditors can send claims, along with a deadline for submitting those claims. A legal LLC has gone through the state registration process, so ending the business must be handled through a formal dissolution process that notifies everyone potentially involved in the business of the plan to dissolve.
When filing the certificate for dissolution, you will need to pay a $70 filing fee. Be sure to include any required documentation, such as the clearance from the Department of Labor and Industry and the Department of Revenue. Follow the procedure as outlined by the Secretary of the Commonwealth. You may need to set a certain time for the meeting and vote to take place, as well as provide sufficient notice to every member in regard to the meeting.
There are several options that allow the members of an LLC to dissolve the business:
- The operating agreement or certificate of organization may outline the dissolution process and what must occur before the process can start.
- You may choose to follow the standard unanimous vote requirement for dissolution.
- Regardless of which option you choose to pursue, make sure to document the decision to start the process of dissolution, either on a consent form or in the meeting minutes.
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