Not every limited liability company (LLC) lasts forever. In fact, many LLCs in Arkansas are only intended to operate for a designated time period. Whatever your reasoning for closing up shop, the state of Arkansas has a specific process that all LLCs must go through before they are considered to be officially dissolved.
Which steps are involved in the Arkansas LLC dissolution process? Are there different processes for businesses based in Arkansas and those expanded from other states? When do you need to dissolve your LLC? We’ll answer all of these questions and more in this article.
How Do You Dissolve an Arkansas LLC?
When closing a business registered as an LLC in the state of Arkansas, you’ll need to take care to dissolve your business exactly as the state outlines. The most important part of this process is filing the correct paperwork with the relevant legal entities, but this is far from the only vital step.
In addition to filing documentation of your Arkansas LLC dissolution, you will need to liquidate the assets of your business, notify all individuals and business entities that have an interest in your company, and resolve any outstanding liabilities with vendors, suppliers, or clients.
There are potentially severe penalties for failing to comply with the Arkansas LLC dissolution process, and you as a business owner could be personally responsible for your LLC’s liabilities and debts. Therefore, it’s extremely important that you complete each step outlined in this guide to ensure an effective and compliant dissolution.
As for the question of when you should dissolve your LLC, you should do this as soon as you’re certain you will no longer conduct business through this entity. This gives you an opportunity to close up shop with the knowledge that you’re not transacting any business after you start the dissolution process.
Dissolution for Domestic Arkansas LLCs
Is your LLC based in Arkansas, and registered as a domestic entity in this state? If so, you’ll start your dissolution process with a document known as the Articles of Dissolution. This form will include some crucial information about your business, so you should fill it out carefully and accurately.
Among the info you’ll need to complete this form is the official business name of your LLC, the date you formed your LLC and the dates of any amendments you filed, the reason for dissolving your LLC, the effective date of your dissolution, and the signature and title of the authorizing officer.
In addition, you need to complete the Final Franchise Tax Report form. Without this document, the state will not dissolve your LLC, so it’s crucial that you include it. This form requires the name and address of your LLC, the name, phone number, and address of your LLC’s contact person, the date and location of your LLC’s formation, the name of your registered agent, and your federal ID number.
After you’ve filled out these forms, you will need to send them to the Arkansas Secretary of State, along with your filing fee of $50 for the Articles of Dissolution and a minimum of $150 for the Final Franchise Tax Report. If you would rather complete the dissolution process online, you can fill out the Articles of Dissolution and your Final Franchise Tax Report on the Secretary of State website.
Dissolutions are usually processed quickly in Arkansas, as it usually just takes a couple of business days. If you need your dissolution processed faster, you can bring your documents to the Secretary of State’s office in person and have them filed immediately.
But what does this process look like for a business that was formed outside the state and then expanded to Arkansas?
Dissolution for Foreign LLCs in Arkansas
If you operate a foreign LLC in the state of Arkansas, the dissolution process looks somewhat different than it does for domestic entities. In fact, it’s actually technically called a cancellation rather than a dissolution. Interestingly, this process has nothing to do with the Office of the Judge of Probate. Instead, you’ll deal directly with the Secretary of State, cutting out your local county’s middleman.
To dissolve a foreign LLC in this state, you’ll first complete the Application for Cancellation by Foreign Limited Liability Company document, which you can fill out online or on a paper form. Much of the information for this form is the same as the info provided for the Articles of Dissolution, but there are some differences for the foreign version.
This form requires your business name, the state you originally formed the LLC in, a mailing address for future service of process, and the name and signature of the LLC’s authorizing officer. You should submit this document along with your Final Franchise Tax Report (which we already discussed in the previous section) to the Secretary of State. The Application for Cancellation document is free to file, but you will need to pay at least $150 for your Final Franchise Tax Report.
Filing speeds for foreign LLCs are similar to the processing speeds for domestic LLCs in this state.
Involuntary Dissolutions in Arkansas
We should also discuss the potential for an LLC to be involuntarily dissolved by the state. There are several reasons this could happen, and most of them revolve around significant mistakes made by the LLC’s ownership group.
For instance, Arkansas could involuntarily dissolve your LLC if you fail to pay your LLC’s franchise taxes or any financial penalties within 60 days of the due date, fail to submit your annual franchise tax report within 60 days, operate your LLC without a registered agent for 60 days, fail to notify the Secretary of State about a change of registered agent, or exceed the LLC’s intended duration period.
It’s obviously never advisable to operate your LLC in a way that leads to the state dissolving it against your will. However, the penalties can be even steeper than you might realize. For example, your LLC will not be allowed to conduct any business activities other than those required to wind up the business and liquidate its assets if it is involuntarily dissolved by the state of Arkansas.
In addition, if you keep operating your business after the state involuntarily dissolves it, you could open yourself up to all sorts of legal issues due to the continued operation of a non-compliant entity. In general, you should be as careful as possible when it comes to following the rules and regulations in this state.
It’s not that the process for dissolving or canceling your LLC in Arkansas is terribly difficult. However, it is a process that you need to take great care to complete in a compliant fashion, or you could expose your business to a wide variety of potential legal complications and financial penalties. Trust us when we say it’s much smarter and easier to simply follow the directions with care to avoid any issues.
Do you need more information about operating an LLC in Arkansas? Take a look at the following resources: