An LLC is a rather unique type of business entity that combines different aspects of both a partnership and a corporation. Although its structure provides added flexibility while it’s being run, it can pose a few extra challenges once you decide to close it down. In fact, even the terms used for breaking apart and ending this type of company vary. Each state has passed its own, often distinct laws governing LLCs. When you and other members of your LLC decide to “close down” operations, your particular state may refer to this as a dissolution, termination, cancellation or “winding up” of the business.
State Requirements for “Winding Up” the LLC May Vary
How many must agree to terminate the company. Despite what you may have included in your operating agreement, your state’s laws will determine many key requirements regarding the dissolution of your LLC. For example, your Peachtree City attorney can advise you as to whether or not all or a majority of your LLC’s members must agree to terminate the business entity;
- < >. Likewise, you'll need to be sure that your operating agreement is in compliance with Georgia's state law regarding the right (or privilege) to “buy out” the business interests of some (or all) of the departing members of the company;
Litigation or mediation. Should your operating agreement fail to properly address “dissolution” or “buy-out” provisions, you may need a highly respected mediator to provide you with a proper interpretation. Otherwise, you'll probably be heading to court;
Settling up the company's debts. Regardless of what your operating agreement says, you can be almost certain that your state law(s) governing LLCs dictate how debts must be handled. Many states will require you to file some type of official statement about all paid or outstanding debts (and how you plan on paying them) in your dissolution or termination filing.
You’ll need to settle up with all outside accounts first before attempting to repay any company debts owed to members. In some cases, it may not even be currently possible to fully reimburse all members’ loans made to the business.
Whatever you do, be sure to meet with your Peachtree City attorney as soon as possible, so you can handle all of the dissolution requirements in keeping with Georgia law. If you're only required to follow a basic or sample format in your final filing, it wise to ask your attorney to review all of your dissolution paperwork before submitting it to the state of Georgia for final approval.
Finally, don't forget to timely file all of the last state and federal tax returns due for the LLC. Also, every member needs to know that if any of the current LLC members wish to start a new business together, brand new LLC paperwork (or that tied to another more appropriate business structure) must be filed in full accordance with all current Georgia laws.
To obtain help with handling all of your Georgia business planning needs, please contact Shane Smith Law today. You can schedule your free initial consultation with a knowledgeable Peachtree City estate planning attorney by calling: (770) 487-8999.