Not every limited liability company (LLC) lasts forever. In fact, many LLCs in Tennessee are only intended to operate for a designated time period. Whatever your reasoning for closing up shop, the state of Tennessee has a specific process that all LLCs must go through before they are considered to be officially dissolved.
Which steps are involved in the Tennessee LLC dissolution process? Are there different processes for businesses based in Tennessee 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 Tennessee LLC?
When closing a business registered as an LLC in the state of Tennessee, 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 Tennessee 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 Tennessee 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 Tennessee LLCs
Is your LLC based in Tennessee, and registered as a domestic entity in this state? If so, there are two different forms, depending on the status of your LLC. These forms will include some crucial information about your business, so you should fill them out carefully and accurately.
Most LLCs will need to file two forms to properly dissolve. First, you’ll complete the Notice of Dissolution, which requires your LLC’s official name, the reason for dissolving your LLC, the effective date of your dissolution, the date you’re filling out the form, and your printed name, signature, and title.
Articles of Termination of Limited Liability Company Existence form, which you can complete online or using a paper form. This is the form used to dissolve an LLC which has accepted financial contributions. Among the info you’ll need to complete this form is the official business name of your LLC, the date you originally formed your LLC, the reason for dissolving the business, an indication that your LLC’s potential creditors have or have not been notified, the date, and your printed name, signature, and title.
If your LLC hasn’t had any contributions, then you’ll fill out the Articles of Termination by the Organizers document, which can also be completed online or with a paper form. The only information you need to complete this form is your LLC’s business name, the date you originally registered your LLC with the state, the date you’re submitting the form, and your printed name, signature, and title.
With all of these documents, you can file them with the Secretary of State by mail, online, or in person. These three forms all have $20 filing fees as well. Tennessee typically processes business filings in one week or less, but if you deliver your documents by hand, they will process them immediately.
But what does this process look like for a business that was formed outside the state and then expanded to Tennessee?
Dissolution for Foreign LLCs in Tennessee
If you operate a foreign LLC in the state of Tennessee, the dissolution process looks quite different than it does for domestic entities. In fact, it’s actually technically called a cancellation rather than a dissolution.
To dissolve a foreign LLC in this state, you’ll first complete the Application for Cancellation of Certificate of Authority document. Much of the information for this form is the same as the info provided for the domestic documents, but there are some differences for the foreign version.
This form requires your LLC’s official business name, the name it operates under in Tennessee (if different), the jurisdiction where your LLC was originally formed, an indication that the LLC will or will not continue service with its registered agent, the date, and your name, signature, and title.
Just like the domestic versions, the Application for Cancellation of Certificate of Authority has a $20 filing fee, and you can file it online, in person, or by mail. The filing options and turnaround times are also exactly the same as the domestic forms.
Involuntary Dissolutions in Tennessee
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, Tennessee could involuntarily dissolve your LLC if you fail to submit your annual report within two months of its due date, fail to designate or maintain a registered agent for at least two months, fail to adhere to the LLC naming regulations in this state, fail to notify the state within two months if you change your registered agent, pay a fee or fine that gets rejected or dishonored, or if a representative of the LLC knowingly presents false information to the state.
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 Tennessee aren’t particularly harsh. For example, you will need to correct any issues that led to the dissolution, file the Application for Reinstatement Following Administrative Dissolution/Revocation document, and pay a $70 fee.
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 Tennessee 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 Tennessee? Take a look at the following resources: