Not every limited liability company (LLC) lasts forever. In fact, many LLCs in Connecticut are only intended to operate for a designated time period. Whatever your reasoning for closing up shop, the state of Connecticut has a specific process that all LLCs must go through before they are considered to be officially dissolved.
Which steps are involved in the Connecticut LLC dissolution process? Are there different processes for businesses based in Connecticut 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 a Connecticut LLC?
When closing a business registered as an LLC in the state of Connecticut, 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 Connecticut 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 Connecticut 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 Connecticut LLCs
Is your LLC based in Connecticut, and registered as a domestic entity in this state? If so, you’ll start your dissolution process with a document known as the Certificate of Dissolution, which you can print off on paper or fill out online. If you would like to, you can even draft your own Certificate of Dissolution from scratch. 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 effective date of your dissolution, your name and signature, and contact information where the state can send confirmation of your LLC’s successful dissolution. It’s important to note that you may also need to pay your Connecticut Business Entity Tax if you haven’t already submitted it for this year.
After you’ve filled out the form, you will need to either submit it online through the state’s online portal, or you can mail or hand-deliver it to the Secretary of State’s office. This filing used to have a $50 fee associated with it, but the state recently changed its fee schedule to make the Certificate of Dissolution free to file.
Under normal circumstances, the Secretary of State should be able to process your LLC’s dissolution within 3-5 business days. If you’re in a hurry, you can pay a $50 expediting fee to shorten your turnaround time to roughly 24 hours.
But what does this process look like for a business that was formed outside the state and then expanded to Connecticut?
Dissolution for Foreign LLCs in Connecticut
If you operate a foreign LLC in the state of Connecticut, the dissolution process looks quite different than it does for domestic entities. In fact, it’s actually technically called a withdrawal rather than a dissolution.
To dissolve a foreign LLC in this state, you’ll first complete the Statement of Withdrawal of Resignation document, which again can either be filed on a paper form or online. Much of the information for this form is the same as the info provided for the Certificate of Dissolution, but there are some differences for the foreign version.
This form requires the original name of your LLC in the jurisdiction where it was formed, the name your LLC uses to transact business in Connecticut (if different), the state or country of the LLC’s formation, contact information for any future service of process deliveries, and your printed name, signature, and date.
The biggest difference from the Certificate of Dissolution might be the fact that the Statement of Withdrawal of Resignation has a $120 filing fee. If you’re in a hurry to withdraw your foreign LLC, you can pay the Secretary of State an extra $50 and they’ll process your withdrawal within 24 hours of receiving your payment and completed documents.
Involuntary Dissolutions in Connecticut
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, Connecticut could involuntarily dissolve your LLC if the LLC has had no active owners for at least 90 days, if the company’s activities and affairs are unlawful in nature, if the LLC hasn’t filed its annual report for at least one year, if the LLC has failed to maintain a registered agent, if it is “not reasonably practicable” for the LLC to continue operations, if the owners use the company in a fraudulent manner, or if the owners act in a manner that is “oppressive” and directly harmful to another owner.
It’s obviously never advisable to operate your LLC in a way that leads to the state dissolving it against your will. If the state does administratively dissolve your business, you’ll need to pay at least $120 to have it re-registered, and your LLC will also lose its good standing until you get it reinstated with the Secretary of State.
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 withdrawing your LLC in Connecticut 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 Connecticut? Take a look at the following resources: