Not every limited liability company (LLC) lasts forever. In fact, many LLCs in North Carolina are only intended to operate for a designated time period. Whatever your reasoning for closing up shop, the state of North Carolina has a specific process that all LLCs must go through before they are considered to be officially dissolved.
Which steps are involved in the North Carolina LLC dissolution process? Are there different processes for businesses based in North Carolina 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 North Carolina LLC?
When closing a business registered as an LLC in the state of North Carolina, 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 North Carolina 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 North Carolina 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 North Carolina LLCs
Is your LLC based in North Carolina, 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 effective date of your dissolution, your printed name, title, and signature, and the date. You may also want to include your North Carolina Secretary of State ID number, but this is optional. The state also recommends including a cover sheet including your contact information, but this is also an optional step.
Once you’ve finished filling out this form, you can submit it and your $30 filing fee to the Secretary of State online, by mail, or in person. If you submit your filing online, you can expect to wait up to five business days. Mailed filings can take up to ten business days. If you are interested in expedited service, you can upgrade to 24-hour service for $100, while same-day service costs $200.But what does this process look like for a business that was formed outside the state and then expanded to North Carolina?
Dissolution for Foreign LLCs in North Carolina
If you operate a foreign LLC in the state of North Carolina, 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 Application for 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 LLC’s official business name, the name your LLC used to conduct business in North Carolina (if different), the jurisdiction where your LLC was originally registered, a mailing address for potential future service of process deliveries, the effective date of your withdrawal, your signature, printed name, and title, and the date. The state also recommends including a cover sheet including your contact information, but this is an optional step.
The filing fee for this form is just $10, and you can submit it online, by mail, or in person. If you submit your filing online, you can expect to wait up to five business days. Mailed filings can take up to ten business days. If you are interested in expedited service, you can upgrade to 24-hour service for $100, while same-day service costs $200.
Involuntary Dissolutions in North Carolina
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, North Carolina could involuntarily dissolve your LLC if you fail to pay any relevant fees, fines, or penalties for at least 60 days, fail to file your annual reports in a timely manner, fail to notify the state within 60 days of any significant changes to your business, fail to respond to the state’s questions about your business, or fail to maintain a registered agent for a period of at least 60 days.
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 fix the problems that caused your LLC to be dissolved, pay any fees or other financial penalties, complete the state’s Application for Reinstatement Following Administrative Dissolution of a Limited Liability Company form, and pay its $100 filing fee.
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 North Carolina 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 North Carolina? Take a look at the following resources: