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There are many reasons to consider dissolving your LLC. Making sure it’s officially terminated can save you from unwanted taxes and legal trouble. So don’t miss out on this important step.
Why Dissolve an LLC
No one wants to deal with business issues that no longer exist. We are sure, you also do not want to be held back by anything related to your LLC, that you do not want to continue.
Therefore, formally dissolving an LLC online is important for the following reasons:
- No More Obligations to Pay LLC Annual Fees and Taxes
- You Will Not be a Defaulter of any State or Fedral Agency
- No Surprises With Lawsuits for Unpaid Debts
How to Dissolve an LLC in Massachusetts | Step by Step Guide
We know wrapping things up is more difficult than starting a new venture. Your level of enthusiasm is not the same while terminating your Limited Liability Company (LLC) compared to the energy you once had when you conceptualized an innovative business idea and materialized in the form of your LLC.
But, some things in life are inevitable. Even terminating your LLC is your voluntary decision, it still feels heavier to carry out the last few duties. Well, we can relate to your feeling.
This is why, in this LLC dissolution guide, we tried to make things simpler and easy for you in 5 simple steps.
- Decide to Dissolve your LLC
- Get an Expert Advice
- Resolve Your Financial Obligation
- File Massachusetts Article od Dissolution
- Some Important Closings Related to Massachusetts LLC
Keep on reading to learn the whole process of LLC termination in simple and concise steps.
Decide to Dissolve your LLC
If your LLC dissolution is voluntary, the LLC owners must make the decision to dissolve their LLC according to the guidelines drafted in the LLC articles of organization.
Remember to document the final decision with a written agreement. To do so:
- Hold a meeting of LLC members
- Take a vote with LLC members to terminate the LLC
- Determining the formal date of dissolution
- Through the LLC’s meeting minutes, record the LLC dissolution vote
Follow Your LLC Operating Agreement
An LLC operating agreement is the document that contains the information from an LLC’s day-to-day operation to the termination of an LLC. Most Massachusetts LLCs outline all the steps for LLC dissolution. While terminating your LLC, follow the guidelines stated in your Massachusetts LLC operating agreement.
In case you had not defined the LLC dissolution process in your Massachusetts LLC operating agreement, you must consult the Massachusetts Secretary of state for further instructions.
Get an Expert Advice
Terminating an LLC is a delicate and multi-step process. It is highly recommended that you seek professional help. Depending on your LLC’s personalized needs, expert advice may come from accountants, bankers, lawyers, the IRS, business brokers, tax experts, auctioneers, etc.
If you have been running your business in a compliant manner, you may not need all the professionals to dissolve your LLC. Hiring any of the famous LLC services online will suffice you.
LLC services such as IncFile or LegalZoom take care of everything related to closing your business. You can pick a package satisfying your LLC needs, and there you go.
Resolve financial obligations
Although the state of Massachusetts does not require you to obtain tax clearance before dissolving your LLC, it is important to resolve any outstanding tax and other financial obligations before filing the Certificate of Dissolution with your state.
Failure to resolve these issues will result in penalties and interest assessed by state and federal tax agencies. If your LLC owes back taxes to the IRS or any other state agency, you will receive a Notice of Federal Tax Lien or a Notice of State Tax Lien.
Once the IRS places a tax lien on your LLC’s property, it can be very difficult to get the tax lien released. To avoid all such stress and headache, you should resolve all the financial obligations on your Massachusetts LLC. Some common Massachusetts LLC financial obligations are listed below:
Massachusetts LLC Taxes
While filing income tax returns, check the box that indicates the document is a final return. Many state revenue agencies in Massachusetts require additional filings for sales tax.
If your LLC has employees, you may risk personal liability if you fail to obligate your payroll tax responsibilities. Inform your Massachusetts state and federal tax agencies that your business is closing. Moreover, notify them that you will cease to file an employer’s quarterly tax form and unemployment returns.
Business Debts
Notify all creditors and lenders of your LLC of your dissolution and settle the remaining debt. Moreover, contact the business associates who owe payment to you or to whom you owe a payment.
In case you can not pay your debts, you should consider filing for bankruptcy. It’s recommended to discuss with your attorney, accountant, and insurers to ensure that everything is accounted for.
File Massachusetts Articles of Dissolution
Massachusetts Certificate of Cancellation is the legal documents that you file with the Secretary of the Massachusetts Commonwealth, Corporations Division to dissolve your LLC voluntarily.
To know more about the administrative LLC Dissolution, please read section 112.19: Certificate of Cancellation and section 112.26: Foreign Limited Liability Companies: Cancellation or Withdrawal of LLC document issued by office of the Secretary of the Massachusetts Commonwealth.
Important Note: Massachusetts Certificate of Cancellation are only filed online with the Secretary of the Massachusetts Commonwealth, Corporations Division. There is no paper filing option.
Moreover, the LLC must file all annual reports and resolve all financial obligations in order to file a certificate of cancellation.
Once the LLC Statement of Dissolution has been filed and processed by the concerned authority, your LLC will be officially dissolved and no longer legally exist.
Dissolve a Domestic LLC in Massachusetts
You can file the Massachusetts Domestic LLC Certificate of Cancellation with the Secretary of the Massachusetts Commonwealth, Corporations Division online.
Login with your Customer ID Number (CID) and PIN. Complete the Certificate of Cancellation form, sign the document, and submit it online.
Cost of Domestic LLC DissolutionIn Massachusetts
Massachusetts Domestic LLC Certificate of Cancellation Fee is 100. This fee is payable to the Secretary of the Massachusetts Commonwealth, Corporations Division and can be paid through credit card, check, or money order.
Dissolve a Foreign LLC in Massachusetts
File Massachusetts Foreign LLC Certificate of Withdrawal with the Secretary of the Massachusetts Commonwealth, Corporations Division online.
Login with your Customer ID Number (CID) and PIN. Complete the Certificate of Cancellation form, sign the document, and submit it online.
Cost of Foreign LLC DissolutionIn Massachusetts
Massachusetts Foreign LLC Certificate of Cancellation or Withdrawal Fee is 100. This fee is payable to the Secretary of the Massachusetts Commonwealth, Corporations Division and can be paid through credit card, check, or money order.
Step 5: Some Important Closings Related to Massachusetts LLC
Close your EIN
LLCs are required to contact the IRS (Internal Revenue Service) to close their Employer Identification Number (EIN) account. The IRS cannot cancel your EIN account, but you notify the agency that you no longer plan to use that EIN in the future by closing your EIN account.
When closing a business as an LLC, the IRS provides a checklist of typical tax actions to take. Make sure you fulfill all the requirements.
Close Your Business and Tax Accounts
While operating as Massachusetts LLC, you would have various tax accounts maintained by different departments within the state of Massachusetts. Some of the common taxes that an LLC may owe are:
- Sales & Use Tax
- Employee Withholding Tax
- Unemployment Insurance Tax
- State Income Tax
- Local Taxes
Simply filing a final return to the concerned tax agency usually means closing your tax accounts. However, you may need other official paperwork to close some accounts. Contact the concerned tax agency to close your tax account.
It is also important to close your business bank account and cancel your credit cards to avoid any financial or legal trouble in the future.
Cancel Licenses, Permits, Professional Registrations, and Business Names
After terminating your Massachusetts LLC, it is crucial to cancel all licenses and permits that you will no longer need. Doing this will protect your reputation and finances.
Trade name, Assumed Name, or Doing Business As (DBA) is a business name other than your own name that you registered with the state or local government for rebranding, branching out into new services, products, or brands, or franchising purposes, etc.
If you have registered a Massachusetts assumed name, you must cancel that business name registration with your local government.
Winding Up | Things to Do After Dissolving your Massachusetts LLC
After the dissolution, your LLC continues to exist to take care of certain final matters. These matters are known as “winding up” the business. To handle winding up your LLC, you are required to designate one or more LLC members or LLC managers.
Massachusetts’s LLC Act outlines the following key winding up tasks:
- As a going concern for a reasonable time, preserving the LLC’s business or property
- Prosecuting and defending all civil, criminal, or administrative proceedings and actions
- Discharging LLC liabilities
- Settling all LLC disputes by arbitration or mediation
- Transferring and disposing of LLC property
- Paying off debts to creditors and lenders
- Distribution of the remaining LLC assets among LLC members.
Involuntary Massachusetts LLC Dissolutions
The state of Massachusetts can cause an LLC LLC to be involuntarily dissolved. There are several reasons for involuntary LLC dissolution and mostly revolve around significant mistakes made by LLC members. Some of the reasons are:
- If LLC is fraudulently formed in the first place
- LLC did not appoint a registered agent let the registered agent lapse
- If LLC failed to file the proper forms to change the registered agent
- If LLC abused the privilege to operate a business in Massachusetts
- If LLC did not pay taxes, annual reports
- If LLC fails to operate in Massachusetts state-compliant manner
It is advisable not to operate your LLC in a manner leading to the state dissolving it against your will. The penalties and legal consequences are steeper than you might imagine.
For instance, your LLC cannot operate in Massachusetts ever again after the involuntary dissolution. You would need to create an LLC again from the start, which would cost you time, money, and mental peace.
If you continue to operate a non-compliant LLC in Massachusetts, you could open yourself up to all sorts of legal issues. Therefore, when it comes to following the state rules and regulations, be mindful and stay compliant.
FAQs on How to Dissolve an LLC in Massachusetts
How do I dissolve my LLC in Massachusetts?
To dissolve your LLC in Massachusetts, you are required to file a certificate of cancellation or certificate of withdrawal form with the Secretary of the Massachusetts Commonwealth, Corporations Division. Meanwhile, you can proceed with the winding-up process of your LLC.
How do I close a business in Massachusetts?
To dissolve a business in Massachusetts you need to follow the following steps:
- Hold a meeting of business owners and record a resolution to Dissolve the Massachusetts business.
- Resolve all the finacial obligations
- File cancelation certificates with the state
- Clear up any business debts
- Distribute the remaining assets among business owners
- Close all business bank accounts
- Cancell all the business licences and certificates that you no longer wish to use
How long does it take to dissolve a business in Massachusetts?
Processing of articles of dissolution usually takes approximately 3-5 business days. The LLC must file all annual reports and resolve all financial obligations in order to file a certificate of cancellation.
Is it hard to dissolve an LLC?
Dissolving a business seems hard at the start. However, this is the best practice to avoid future penalties, liabilities, and lawsuits which are harder to deal with. How to dissolve an LLC guide made the LLC dissolution simple and straightforward. Follow the guide and shut the doors of lawsuits or penalties forever.
Why would you dissolve an LLC?
No one wants to deal with business issues that no longer exist. Therefore, formally dissolving an LLC is important for the following reasons:
- No More Obligations to Pay LLC Annual Fees and Taxes
- You Will Not be a Defaulter of any State or Fedral Agency
- No Surprises With Lawsuits for Unpaid Debts
What is the difference between dissolution and termination?
The terms LLC termination and LLC dissolution are often used interchangeably but have distinct legal meanings. When an entity ceases to legally exist, it is called termination of the entity. On the other hand, dissolution is the winding up of the affairs of the entity before the termination of the entity.
How much does it cost to dissolve an LLC?
Massachusetts Foreign LLC Certificate of cancelation or withdrawal Fee or domestic LLC certificate of Cancellation fee is $100. This fee is payable to the Secretary of the Massachusetts Commonwealth, Corporations Division and can be paid through credit card, check, or money order.
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