How to Dissolve an LLC in Alabama

Dissolving a business often involves complex procedures. However, for a limited liability company in Alabama, dissolving it takes a handful of paperwork. When an LLC is formed in Alabama, the owner(s) draft the operating agreement. If the owner(s) decide to dissolve the business, the dissolution takes place following the articles mentioned in the operating agreement.

In this article, LLCBuddy editors shared the ins and outs of dissolving an LLC in Alabama. LLCs must file the Articles of Dissolution with the Alabama Secretary of State like the formation certificate was filed at the time of forming an LLC in Alabama. It takes a few days to process and a handful of fees to be paid to the SOS. Many people hire a professional service to do the paperwork to process it hassle-free.

At the time of forming an LLC, an operating agreement draft must be written. Generally, the process of dissolution takes place following the operating agreement (read: Alabama LLC operating agreement). Before the dissolution process, there are a few things to consider in the LLC.

First, make sure all the members of the LLC agree to dissolve the business. Once all the members are ready, their consent should be recorded via voting. After casting their vote in favor of the dissolution, the legal process must be started.

Dissolution of Alabama LLC requires three broad procedural steps. Having a Alabama LLC Operating Agreement, closing all the tax accounts, and finally submitting the Articles of Dissolution form to the Alabama Secretary of State.

Step 1: Follow the LLC Operating Agreement in Alabama

When you have started an LLC as a business entity, then there is an operating agreement that is formed. There are complete details of how the company will function and grow in that operating agreement, which acts as a comprehensive guide. There is also a dissolution process, which is added to your agreement. The common dissolution steps that almost every LLC follows are:-

First of all, the dissolution vote will take place among the LLC members in the dissolution meeting. If the majority is with the YES, then the process goes into legal proceedings.

All the dissolution votes will be noted down and recorded with the minutes of the meeting or a consent form.
After that, a formal date for dissolving the LLC will be decided.
The next step is counting the LLC assets and dividing them among the stakeholders and members accordingly.
Finally, the creditors of the business are notified, and the debts of the business are settled.

This is a general process. However, it is strongly recommended to seek professional help to avoid any complications when it comes to terminating an LLC in Alabama.

Get a Professional Agent Service

When it comes to a limited liability company dissolution, it is important to get professional help. Alabama registered agent will guide you with everything you need to close your limited liability company. While choosing a registered agent make sure they have a physical street address in the state. A professional service provider helps you to file the Article of Dissolution and close your various tax accounts without any hassle. Below are the best LLC services in Alabama that we strongly recommend for you.

LLC Service	Our Rating & Pricing	Top Features	Learn More
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Step 2: Close All Tax Accounts

Every action that an official business takes is legally bound to some minimum business taxes. For that, various accounts, especially business entity tax accounts, are maintained by the state government with the help of various departments. You should consider all the taxes that you have paid for your LLC’s duration and make a list of them.

You must contact all government entities and clear the amount of outstanding taxes due by the date you have decided to dissolve. All the taxes must be paid in advance so that you don’t face any issues in the process of shutting down your LLC.

Some of the common taxes that limited liability companies have to pay are:

Unemployment insurance tax
Employee withholding tax if your LLC has employees.
If your LLC is engaged in selling taxable goods then they are liable to pay the sales and use tax.

Most of these taxes are normally filed, but some departments require official paperwork, without which it is impossible for the business to close their accounts. Apart from business taxes, federal taxes, personal income taxes, and franchise taxes are to be considered. For the franchise taxes, a franchise tax form is required. That is why the LLC owner should go through the sales tax guide and hire an accounting service.

Tax clearance

While dissolving the Alabama LLC, the owner is not required to obtain a tax clearance certificate. However, if you have filed federal taxes, then you must go through the final return option on your IRS form.

The IRS form for the LLCs that are classified as partnerships is Form 1065, and those LLCs who have registered themselves as corporate should check IRS Form 1120.

BOI Reporting

If you’re going to dissolve your LLC this year, make sure to update your BOI reporting. From January 1, 2024, the Financial Crimes Enforcement Network (FinCEN) implied a rule to all businesses, including LLCs in Alabama to file the BOI Report. The Beneficial Ownership Information (BOI) in Alabama is a report that states about in and out of the company. This report must be up-to-date and submitted to the FinCEN before you proceed to the dissolution.

Step 3: File Articles of Dissolution

There is a list of dissolution documents that you, as an LLC owner, have to file. Once these articles are filed, the legal existence of the LLC will be over. Like a Alabama Certificate of Formation, one has to file Alabama LLC Certificate of Formation. The dissolution procedure and filing the articles of dissolution form is very easy and is discussed below.

First of all, the LLC owner(s) has to file the Article of Dissolution. There are multiple methods of filing available, such as filing by mail, in-person drop, or/and online filing.
You can follow the filing instructions on the official portal so that the steps for dissolution will be easier to complete.
For offline filing, LLCs must download the form and submit it to the Alabama Secretary of State physical office along with the state filing fee.
If you want to dissolve Alabama Foreign LLC then look for the Foreign LLC Dissolution process.
You must fill in all the important and legal information in the form, so you should be extra careful.
After filling in all the important information, you must choose the mode of payment you want to use to pay the LLC dissolution filing fees.
After filling in every detail, one should submit the form through an official mail address and make a payment.

Filing	Forms and Details
Online Applications	Not Applicable
Offline Applications	Restated Articles of Dissolution
SOS Contact (if offline application is available)	Secretary of State, P.O. Box 5616, Montgomery, AL 36103
Filing Time	7 working days approx.
Filing Fee	$100

The LLC you own is dissolved, and you are free from all the liabilities linked with the LLC and its taxes. A copy of both original articles and recorded articles should be submitted in front of the probate judge. Now it’s his call whether he accepts your expedited dissolutions or not.

Points to Be Noted When Dissolving an LLC in Alabama

Apart from these three steps, no major dissolution rules are there in Alabama. However, there are some other tasks one has to keep in mind while dissolving an LLC legally.

Winding Up

Some purposes of LLC require some attention even after dissolution, known as winding up. The task of winding up includes.

For a certain period, the property of a business requires preservation.
If there is any civil case against the LLC, then the owner needs to finish them.
Settle all the existing disputes of LLC.
Transfer all the property of the LLC to the names of partners.
Release all the liabilities that the LLC owes to others.
Rightful distribution of all the assets among members, according to their percentage of partnerships.

Cost of Dissolving LLC

LLC costs in Alabama include the formation as well as dissolution fees. To dissolve an LLC in Alabama, LLCs have to file an Article of Dissolution. The filing fee is $100. The details are mentioned in the articles of dissolution filing form. Following are the ways to pay for the dissolution,

You can select a payment pick-up option.
There is an option for direct account transfer through your prepaid accounts.
LLC owners can also use their Credit cards, providing their complete details and types. Along with that, an original signature is required to authorize the transaction the state will make.

After Dissolving Your LLC

After you dissolve an LLC in Alabama, you can reinstate or revive the same within a given time. In Alabama, the LLC name will be available up to 120 days. After this, the name will be available to other LLCs. Besides, you might revive or reinstate the LLC in Alabama if that is available. According to the Alabama SOS, you can revive your LLC after you file the formation documents afresh. There is no time limit to revive your LLC in Alabama.

Reasons Behind Dissolving an LLC in Alabama

People always think they can leave the company without any notice and there will be no issue. But if you have an LLC that you created with a legal obligation, it needs to be ended that way. Yes, if someone will dissolve an LLC in Alabama, they will have to do it while taking care of the government. For dissolving the company, there is always a reason. The reason can be voluntary or involuntary too. Let’s get to know about the involuntary reasons,

If the company was caught doing illegal business.
If the company’s member died due to some reason or went bankrupt.
The dissolution will be mandatory if the assets of the business are used unwisely.
If the time being of the company was already determined in the will, then the company will go into dissolution at that time.

Top Businesses in Alabama

With the population of 5,097,641, Alabama is one of the favorable places to start an LLC. According to several reports, starting an LLC for Healthcare Services can be profitable as various places in the state showed steady growth in this business over the past few years. On the other side, based on the city or region you’re going to start your LLC, you can decide the type of business to start. Following are the top 5 businesses you can start in Alabama.

Healthcare Services
Bank Holding Company
Academic Institution
Emergency Services
Construction Supplies

Alabama LLC Dissolution Review – A Quick Recap

Here’s a recap of the steps you must follow when dissolving your Alabama LLC. Click on the steps in this list if you want to read the full details.

Follow Your Alabama LLC Operating Agreement: Remember that when you started, you created an operating agreement. Use this agreement as a guide in proceeding with the dissolution of your LLC.
Close All Tax Accounts: Make sure you close all your tax accounts to avoid incurring further costs.
File Certificate of Formation: File the article of dissolution to make it known to the state where your LLC operates that you are indeed no longer in business.

FAQs

How do I dissolve an LLC in Alabama?

To dissolve an LLC in Alabama, you must file dissolution paperwork with the Alabama Secretary of State.

What forms do I need to file to dissolve my Alabama LLC?

You will need to file form SOS-CI-2.02 Dissolution of an LLC with the Alabama Secretary of State.

Can I file for LLC dissolution online in Alabama?

Yes, you can file for LLC dissolution online through the Alabama Secretary of State’s website.

What is the fee for dissolving an LLC in Alabama?

The fee to dissolve an LLC in Alabama is $100.

Are there any tax requirements when dissolving an LLC in Alabama?

Yes, you must file a final tax return and pay any outstanding taxes before dissolving your LLC in Alabama.

How long does it take to dissolve an LLC in Alabama?

It typically takes 2-4 weeks for the Alabama Secretary of State to process LLC dissolution paperwork.

Can I reinstate my Alabama LLC after it has been dissolved?

Yes, you can reinstate a dissolved LLC in Alabama by filing for reinstatement and paying any associated fees.

What happens to my Alabama LLC’s debts and liabilities after dissolution?

After dissolving an LLC in Alabama, the company is responsible for paying off any existing debts and liabilities.

Do I need to notify creditors and employees when dissolving my Alabama LLC?

Yes, it is important to notify creditors, employees, and other stakeholders when dissolving an LLC in Alabama.

Can I dissolve my Alabama LLC if it is in debt?

Yes, you can dissolve an Alabama LLC even if it is in debt, but you must settle all debts before the dissolution is finalized.

What are the steps to dissolve an Alabama LLC with no assets?

If your Alabama LLC has no assets, you can still dissolve it by filing the necessary paperwork with the Secretary of State.

Can I transfer my Alabama LLC’s assets to another entity before dissolving?

Yes, you can transfer your Alabama LLC’s assets to another entity before dissolving, as long as all legal requirements are met.

Do I need a lawyer to dissolve my Alabama LLC?

While not required, it is recommended to consult with a lawyer when dissolving an LLC in Alabama to ensure all legal requirements are met.

Can I dissolve my Alabama LLC if it is involved in ongoing legal proceedings?

If your Alabama LLC is involved in ongoing legal proceedings, you may still be able to dissolve it, but you should consult with legal counsel first.

What happens to my Alabama LLC’s business name after dissolution?

Once your Alabama LLC is dissolved, the business name becomes available for use by other entities.

Do I need to notify the Alabama Department of Revenue when dissolving my LLC?

Yes, you must notify the Alabama Department of Revenue of your LLC’s dissolution to ensure all tax obligations are fulfilled.

Can I dissolve my Alabama LLC without a vote of the members?

In Alabama, the LLC operating agreement typically outlines the dissolution procedure, including whether a vote of the members is required.

What is the difference between administrative dissolution and voluntary dissolution in Alabama?

Administrative dissolution is initiated by the state, while voluntary dissolution is initiated by the LLC members.

Can I dissolve my Alabama LLC if it is inactive?

Yes, you can dissolve an inactive Alabama LLC by filing for dissolution with the Secretary of State.

Do I need to cancel my Alabama LLC’s business licenses and permits before dissolving?

Yes, it is important to cancel all business licenses and permits associated with your Alabama LLC before finalizing the dissolution.

Can I dissolve my Alabama LLC if it is in good standing with the state?

Yes, you can dissolve an Alabama LLC in good standing with the state by following the proper dissolution procedures.

What is a Certificate of Dissolution in Alabama?

A Certificate of Dissolution is the official document that signifies the formal dissolution of an Alabama LLC.

Can I sell my Alabama LLC instead of dissolving it?

Yes, you can sell your Alabama LLC to another entity instead of dissolving it, as long as all legal requirements are met.

Can I change my mind after initiating the dissolution of my Alabama LLC?

Yes, you can typically halt the dissolution process of your Alabama LLC at any time before it is finalized.

Do I need to notify the Alabama Secretary of State when dissolution is complete?

Yes, you should notify the Alabama Secretary of State once the dissolution of your LLC is complete to update their records.

Can I dissolve my Alabama LLC if it is still making a profit?

Yes, you can dissolve a profitable Alabama LLC if you no longer wish to continue operating the business.

Are there any ongoing requirements after dissolving my Alabama LLC?

After dissolving an LLC in Alabama, you may still need to fulfill certain tax obligations, so it is important to consult with a tax professional.

Can creditors come after me personally after dissolving my Alabama LLC?

If your Alabama LLC has debts that cannot be fully paid off, creditors may come after personal assets depending on how the dissolution was executed.

How do I notify customers, vendors, and other business partners of my Alabama LLC’s dissolution?

It is important to formally notify customers, vendors, and other business partners of your Alabama LLC’s dissolution in writing.

What information is required on the Certificate of Dissolution in Alabama?

The Certificate of Dissolution in Alabama generally requires information such as the name of the LLC, the date of dissolution, and a statement that the members have voted to dissolve the LLC.

In Conclusion

Dissolving a business is not an easy task as a lot of homework is involved with the process. The official process might have only a few steps, however, before and after dissolving the LLC, there might be a lot of other tasks. In this case, it is highly recommended to get a professional service. If you are looking to file an LLC at $0, then ZenBusiness is your answer.

Limited liability companies reduce owners’ personal liability. Having an LLC is quite cost-effective. However, if it is required to close down the business, then the dissolution process should be done legally. This article shared the general steps. Let us know if you have any queries.