Not every limited liability company (LLC) lasts forever. In fact, many LLCs in Illinois are only intended to operate for a designated time period. Whatever your reasoning for closing up shop, the state of Illinois has a specific process that all LLCs must go through before they are considered to be officially dissolved.
Which steps are involved in the Illinois LLC dissolution process? Are there different processes for businesses based in Illinois 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 Illinois LLC?
When closing a business registered as an LLC in the state of Illinois, 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 Illinois 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 Illinois 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 Illinois LLCs
Is your LLC based in Illinois, and registered as a domestic entity in this state? If so, you’ll start your dissolution process with a document known as the Statement of Termination. This form will include some crucial information about your business, so you should fill it out carefully and accurately. On the other hand, the Statement of Termination is such a simple document that it would be hard to mess it up too badly.
Among the info you’ll need to complete this form is the official business name of your LLC, contact information for potential future service of process deliveries, your printed name and signature, and the date. When you’ve finished filling out the form, you can submit it by mail or in person to the Secretary of State, Department of Business Services, Limited Liability Division.
The filing fee for this document is just $5. Once you’ve submitted your check and your Statement of Termination form to the state (either in person or by mail), you can expect your dissolution to be processed within 10 days. Expedited service is only available to people who drop off their paperwork in person. For $50, the Secretary of State will process your filing in 24 hours.
But what does this process look like for a business that was formed outside the state and then expanded to Illinois?
Dissolution for Foreign LLCs in Illinois
If you operate a foreign LLC in the state of Illinois, 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. 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 Withdrawal document. Much of the information for this form is the same as the info provided for the Statement of Termination, but there are some differences for the foreign version.
This form requires your LLC’s official business name, the jurisdiction it was originally registered in, an address for potential future service of process deliveries, your printed name and signature, and the date.
The fees and turnaround times for this document are exactly the same as the Statement of Termination. You’ll need to submit a check for $5 along with your Application for Withdrawal to the Secretary of State by mail or in person. If you want expedited 24-hour service instead of the standard 10-day turnaround, you can pay an extra $50 (note that this option is only available in person).
Involuntary Dissolutions in Illinois
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, Illinois could involuntarily dissolve your LLC if you fail to file your annual report or pay any associated fees, misrepresent yourself or your business using your LLC, fail to appoint and/or maintain a registered agent, fail to respond to requests for information from the state, or have any payment made to the Secretary of State returned due to insufficient funds.
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. If your LLC is administratively dissolved, you have either 60 or 120 days to respond and remedy any issues the state might have with your business, depending on what those issues are. If you don’t, your LLC will be prevented from transacting business except for wrapping up its affairs.
In addition, depending on the reason your LLC was dissolved, there could be significant fines involved, not to mention the minimum $200 payment you’ll need to submit if you want your LLC reinstated.
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 Illinois 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 Illinois? Take a look at the following resources: