Not every limited liability company (LLC) lasts forever. In fact, many LLCs in Minnesota are only intended to operate for a designated time period. Whatever your reasoning for closing up shop, the state of Minnesota has a specific process that all LLCs must go through before they are considered to be officially dissolved.
Which steps are involved in the Minnesota LLC dissolution process? Are there different processes for businesses based in Minnesota 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 Minnesota LLC?
When closing a business registered as an LLC in the state of Minnesota, 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 Minnesota 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 Minnesota 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 Minnesota LLCs
Is your LLC based in Minnesota, and registered as a domestic entity in this state? If so, there are a couple of different processes used to dissolve your business. If your LLC has accepted contributions, you’ll start your dissolution process with a document known as the Statement 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 signature of your LLC’s authorized person, and contact information in case the state has questions about your dissolution. Then, you will need to complete the Statement of Termination. This form requires the exact same information as the Statement of Dissolution, which raises the question of why Minnesota requires two identical document filings to dissolve an LLC.
If your LLC has not accepted any financial contributions, you can file one combined form known as the Articles of Dissolution and Termination. This form requires the name of your LLC, the date your LLC was formed, the signature, printed name, and title of your LLC’s authorized person, and contact info.
All of these documents have the same filing options and fees. You can file via mail for $35, online for $55, or in person for $55. Documents filed online usually take less than a day to process, while in-person filings are typically processed as you wait. If you file via mail, the state is a bit vaguer regarding turnaround times, as they simply state that filings are processed on a “first in/first out” basis. In our experience, this typically takes 5-7 business days.
But what does this process look like for a business that was formed outside the state and then expanded to Minnesota?
Dissolution for Foreign LLCs in Minnesota
If you operate a foreign LLC in the state of Alabama, 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 Certificate of Withdrawal document. Much of the information for this form is the same as the info provided for the domestic forms, but there are some differences for the foreign version.
This form requires the name of your LLC in its home jurisdiction, the name your LLC uses in Minnesota (if different), the jurisdiction where your LLC was originally formed, contact information for potential future service of process deliveries, your signature, and the date. Just like with the domestic forms, the Certificate of Withdrawal costs $35 if filed via mail and $55 if filed online or in person.
Involuntary Dissolutions in Minnesota
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, Minnesota could involuntarily dissolve your LLC if “the conduct of all or substantially all of the company’s activities is unlawful,” if it is unreasonable for your LLC to continue operating in accordance with the processes laid out in its operating agreement, if the company is managed in a fraudulent manner, if there are no active members for a period of at least 90 days, or if your LLC fails to file its annual reports.
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 in this state are considerably less harsh than the penalties in many other states. If your LLC is administratively dissolved in Minnesota, you’ll only need to pay a nominal $25 fee and catch up on your annual report filings.
Still, 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 Minnesota 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 Minnesota? Take a look at the following resources: