Not every limited liability company (LLC) lasts forever. In fact, many LLCs in Kentucky are only intended to operate for a designated time period. Whatever your reasoning for closing up shop, the state of Kentucky has a specific process that all LLCs must go through before they are considered to be officially dissolved.
Which steps are involved in the Kentucky LLC dissolution process? Are there different processes for businesses based in Kentucky 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 Kentucky LLC?
When closing a business registered as an LLC in the state of Kentucky, 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 Kentucky 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 Kentucky 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 Kentucky LLCs
Is your LLC based in Kentucky, 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 reason for dissolving your LLC, and the effective date of the dissolution, along with your name, title, signature, and the date. There is also a spot on the form where you can include any additional information you may deem to be important.
When you’re done filling out the form, you can submit it to the Secretary of State along with your $40 filing fee. The state usually processes dissolutions the same day you file them, but they do note on their website that it can take up to three business days in some situations.
But what does this process look like for a business that was formed outside the state and then expanded to Kentucky?
Dissolution for Foreign LLCs in Kentucky
If you operate a foreign LLC in the state of Kentucky, the dissolution process looks slightly 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 Certificate of Withdrawal document. 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 jurisdiction where you originally registered your LLC, an address for potential future service of process deliveries, and the effective date of your dissolution, along with your name, signature, and the date.
When you finish filling out the form, you can submit it to the Secretary of State with your $40 filing fee. Just like with the Articles of Dissolution, the state usually has this filing processed the same day you submit it, but it can take up to three business days.
Involuntary Dissolutions in Kentucky
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, Kentucky could involuntarily dissolve your LLC if you fail to file your annual reports in a timely fashion, fail to designate or maintain a registered agent, or fail to inform the state when you change your registered agent, among other reasons.
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, you will need to respond to the state’s administrative dissolution within 60 days or your LLC’s right to conduct business in this state will be terminated. You will also need to pay a $100 fee, as well as any late fees or fines that may apply.
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 Kentucky 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 Kentucky? Take a look at the following resources: