Not every limited liability company (LLC) lasts forever. In fact, many LLCs in Iowa are only intended to operate for a designated time period. Whatever your reasoning for closing up shop, the state of Iowa has a specific process that all LLCs must go through before they are considered to be officially dissolved.
Which steps are involved in the Iowa LLC dissolution process? Are there different processes for businesses based in Iowa 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 Iowa LLC?
When closing a business registered as an LLC in the state of Iowa, 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 Iowa 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 Iowa 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 Iowa LLCs
Is your LLC based in Iowa, and registered as a domestic entity in this state? If so, you’ll start your dissolution process by preparing a Statement of Dissolution. Unlike other states, Iowa does not have a form to fill out for this filing. Instead, you’ll need to make your own from scratch, which can definitely be a bit of a hassle.
All the information you need for this filing is the name of your business and an indication that you are dissolving the LLC. Then, you simply need to submit the form to the Secretary of State, Business Services Division, along with your $5 filing fee. You can submit this document by mail, fax, or in person. The state’s processing speeds for this filing do vary a bit, but in general, they’ll get your filing processed within 1-3 business days.
After you’ve filed the Statement of Dissolution, you’ll need to wind up your business affairs. Once you’ve finished, you will then file a Statement of Termination. This form requires the same information as the Statement of Dissolution, and it also has the same filing instructions, fee, and turnaround times.
But what does this process look like for a business that was formed outside the state and then expanded to Iowa?
Dissolution for Foreign LLCs in Iowa
If you operate a foreign LLC in the state of Iowa, the dissolution process does not differ in any way from the process used to dissolve a domestic LLC. Simply follow the instructions we outlined above to successfully dissolve and terminate your LLC.
Involuntary Dissolutions in Iowa
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, Iowa could involuntarily dissolve your LLC if you fail to submit a biennial report for more than 60 days past its due date, fail to pay any fee, tax, or penalty assessed upon your LLC by the state for at least 60 days, or fail to designate or maintain a registered agent for a period of 60 days.
Once any of these incidents happen, the Secretary of State will serve you with a copy of the dissolution order. From that point, you have 60 days to respond by fixing any outstanding issues. If you don’t, your business will be officially dissolved. From this point on, you will only be allowed to wind up your LLC’s affairs, and are no longer allowed to conduct business. However, reinstatement in this state costs just $5 (plus any back fees, taxes, or penalties), so it’s not that big of a hassle to get it back up and running again.
It’s obviously never advisable to operate your LLC in a way that leads to the state dissolving it against your will.
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 Iowa 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 Iowa? Take a look at the following resources: