Not every limited liability company (LLC) lasts forever. In fact, many LLCs in Washington, D.C., are only intended to operate for a designated time period. Whatever your reasoning for closing up shop, the District of Columbia has a specific process that all LLCs must go through before they are considered to be officially dissolved.
Which steps are involved in the Washington, D.C., LLC dissolution process? Are there different processes for businesses based in Washington, D.C., and those expanded from other jurisdictions? 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 Washington, D.C., LLC?
When closing a business registered as an LLC in the District of Columbia, you’ll need to take care to dissolve your business exactly as the district 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 Washington, D.C., 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 Washington, D.C., 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 Washington, D.C., LLCs
Is your LLC based in Washington, D.C., and registered as a domestic entity in this jurisdiction? If so, you’ll start your dissolution process with a document known as the Statement of Dissolution for Domestic Limited Liability Company. 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 originally registered your LLC, the effective date of your dissolution, your name, and your signature.
After you fill out this form, you will submit it to the Department of Consumer and Regulatory Affairs, Corporations Division by mail, online, or by hand. This filing has a $220 filing fee which must be paid when you submit your forms.
Typically, the district takes around 15 business days to process business filings. However, you can purchase expedited service to speed up your processing time: $50 for three-day service or $100 for same-day service. It’s important to note that any documents dropped off in person are automatically charged for expedited service.
But what does this process look like for a business that was formed outside the district and then expanded to Washington, D.C.?
Dissolution for Foreign LLCs in Washington, D.C.
If you operate a foreign LLC in the District of Columbia, 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 jurisdiction, you’ll first complete the Withdrawal of Foreign Registration Statement document. Much of the information for this form is the same as the info provided for the Statement of Dissolution, but there are some differences for the foreign version.
This form requires your LLC’s business name, the date you registered your LLC to conduct business in Washington, D.C., the jurisdiction where your LLC was originally formed, an address for potential future service of process deliveries, your name, and your signature.
Just like the domestic version, you will submit this form to the Department of Consumer and Regulatory Affairs, Corporations Division by mail, online, or by hand, along with your $220 fee.
The district takes around 15 business days to process business filings, but you can purchase expedited service: $50 for three-day service or $100 for same-day service. Any documents dropped off in person are automatically charged for expedited service.
Involuntary Dissolutions in Washington, D.C.
We should also discuss the potential for an LLC to be involuntarily dissolved by the district. There are several reasons this could happen, and most of them revolve around significant mistakes made by the LLC’s ownership group.
For instance, Washington, D.C., could involuntarily dissolve your LLC if you fail to pay any fines or fees assessed to your LLC within five months of the due date, fail to file a biennial report within five months of the deadline, or fail to maintain a registered agent for at least 60 days.
It’s obviously never advisable to operate your LLC in a way that leads to the district dissolving it against your will. However, the penalties can be even steeper than you might realize. For example, your LLC will need to file an application for reinstatement, correct the issues that caused the dissolution, and pay any fees that would have been assessed had your LLC been active the entire time it was dissolved.
In addition, if you keep operating your business after the district 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 the District of Columbia.
It’s not that the process for dissolving or withdrawing your LLC in Washington, D.C., 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 Washington, D.C.? Take a look at the following resource: