Not every limited liability company (LLC) lasts forever. In fact, many LLCs in Virginia are only intended to operate for a designated time period. Whatever your reasoning for closing up shop, the state of Virginia has a specific process that all LLCs must go through before they are considered to be officially dissolved.
Which steps are involved in the Virginia LLC dissolution process? Are there different processes for businesses based in Virginia 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 Virginia LLC?
When closing a business registered as an LLC in the state of Virginia, 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 Virginia 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 Virginia 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 Virginia LLCs
Is your LLC based in Virginia, 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 Cancellation. 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, your LLC’s State Corporation Commission ID number, the date you originally registered your LLC, your signature, printed name, title, and the date, along with any other information you deem relevant.
After you fill out the form, you can submit it online, or you can print off the form and submit it via mail or in person to the State Corporation Commission. No matter how you choose to file it, there is a $25 fee associated with this filing. If you file via mail, it could take the state up to two weeks to process your filing, but online filings are processed immediately.
But what does this process look like for a business that was formed outside the state and then expanded to Virginia?
Dissolution for Foreign LLCs in Virginia
If you operate a foreign LLC in the state of Virginia, 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 a Certificate of Cancellation of a Foreign Limited Liability Company Registered to Transact Business in Virginia document. Much of the information for this form is the same as the info provided for the Articles of Cancellation, but there are some differences for the foreign version.
This form requires your LLC’s business name, the jurisdiction where your LLC was originally registered, your LLC’s State Corporation Commission ID number, an indication that your LLC has merged with another entity or converted to another entity type (if applicable), a mailing address for potential future service of process deliveries, an indication that your LLC has either fulfilled its tax obligations or doesn’t have any tax obligations, your name, signature, title, and the date.
This form can be submitted online, or you can mail it or deliver it by hand to the State Corporation Commission. There is a $25 fee associated with this filing. If you file via mail, it could take the state up to two weeks to process your filing, but online filings are processed immediately.
Involuntary Dissolutions in Virginia
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, Virginia could involuntarily dissolve your LLC if your LLC exceeds or abuses its authority, you fail to maintain an active registered agent for your LLC, you fail to file any documents required by Virginia state law, or if your LLC establishes a practice of hiring unauthorized aliens.
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, to get your LLC reinstated, you would need to file an application for reinstatement, and pay a $100 fee and any late fees or fines. If the state involuntarily cancels your LLC due to hiring unauthorized aliens, you won’t be allowed to reinstate it for at least one year.
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 Virginia 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 Virginia? Take a look at the following resources: