To dissolve a limited liability company one has to take up a set of required steps. In Illinois, if you and the members of the LLC want to discontinue business, then it is necessary to dissolve their business legally to avoid any administrative and legal consequences. To dissolve an LLC in Illinois, you are required to submit a complete Article of Dissolution to the Secretary of State. Before submitting the Article of Dissolution, one must follow the operating agreement.
If you have an Illinois LLC (domestic or foreign) you must have an operating agreement. The first step towards the dissolution of Illinois LLC is to follow the operating agreement. There are some points to be noted before proceeding with the official paperwork. At first, make sure all the members of the LLC are agreed 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. Here are the steps to address for dissolving Illinois LLC.
On this page, you’ll learn about the following:
- How to Dissolve an LLC in Illinois
- After Dissolving Your LLC
- Reasons Behind Dissolving Illinois LLC
- Illinois LLC Dissolution Review
How to Dissolve an LLC in Illinois
Dissolution of Illinois LLC requires three broad procedural steps. Having an Illinois LLC Operating agreement, close all the tax accounts, and finally submit the Articles of Dissolution form to the Illinois Secretary of State.
Step 1: Follow Your Illinois LLC Operating Agreement
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.
Get a Professional Agent Service
When it comes to a limited liability company dissolution, it is important to get professional help. The Illinois 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 we strongly recommend for you.
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 account, 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 until the date you have decided for dissolution. All the taxes must be paid in advance so that you don’t face any issues in the further 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. If you want to do the accounting yourself or make accounting easy, try FreshBooks.
While dissolving the Illinois LLC, the owner does not require 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 LLC that are classified as partnerships is form 1065, and those LLC’s who have registered themselves as corporate should check IRS form 1120.
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 an Illinois Articles of Organization, one has to file Illinois LLC Articles of Dissolution. 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 file by mail, in-person drop, or/and online filing. To get the application form you need to visit the Secretary of State Website of Illinois state.
- You can follow the filing instruction on the official portal so that the steps for dissolution will be easier to complete.
- In that particular SOS website, the LLC owner has to look for the Domestic LLC Articles of Dissolution page.
- If you want to dissolve Illinois Foreign LLC then look for the Foreign LLC Dissolution process.
- There is a form available on this page, which is the article of dissolution you are looking for. You have to download that pdf form and start filling it.
- 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.
- It takes 3-5 business days after filing of articles of dissolution if you are filing it by mail or in-person.
Mail to (OR in-person drop),
Secretary of State
Department of Business Services
Limited Liability Division
501 S. Second St., Rm. 351
Springfield, IL 62756
Filing Fee: $5
The LLC you owned 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 that he accepts your expedited dissolutions or not.
Points to Be Noted When Dissolving Illinois LLC
Apart from these three steps, no major dissolution rules are there in Illinois. However, there are some other tasks one has to keep in mind while dissolving an LLC legally.
There are some purposes of LLC that 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 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 cost in Illinois includes the formation as well as dissolution fees. To dissolve an LLC in Illinois, LLCs have to file an Article of Dissolution. The filing fee is $5. The details are mentioned on the second page of the article dissolution filing form. Following are the ways to pay for the dissolution,
- You can select a payment pick-up option.
- There is an option of 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 state will make.
After Dissolving Your LLC
After you formally dissolve your LLC, your business name will not be reserved anymore. Any other business entity will be eligible to use your Illinois LLC name immediately after 120 days of dissolving your LLC. On the other hand, if you have a foreign LLC in other states, then you must comply with the SOS of the state after the dissolution of your LLC in Illinois. A registered agent can help you do the needful.
Reasons Behind Dissolving Illinois LLC
There are so many types of business entities. It is all about how someone makes one, and we all know that it is important to do it with proper regulations. So if we are creating a company, we have to check these regulations while shutting it down. There can be so many reasons why someone would want to dissolve an LLC in Illinois. Let’s take a look at them,
- If the partners no longer want to be in the business, it will be essential to dissolve it.
- It is possible that one of the partners died because of something. So it will be essential to do the same.
- The fight among the owners can cause the company to go for voluntary dissolution.
- It is possible that the company is not making much money, so yes, that is also a reason.
- Selling the company to someone else is also why people dissolve the company.
Top Businesses in Illinois!
To make a good company, one must know what they are doing. So if they have researched the facts and figures, they will find what is suitable for a start. That is why everyone knows that if you want to start an LLC in Illinois, you better get the figures right. But don’t worry, we have done that for you too!
- Financial industry: With the help of the financial industry, everyone can get what they need in their career or life. So this industry, which includes financial services, leasing, renting, real estate, and insurance, is crucial. If we talk about Illinois, it contributed $166.55 billion in the GDP, which is an immense amount of all industries.
- Manufacturing: The material that we use is the finished good, so do we get that directly? No, we don’t. The goods that we get are the ones that go through the manufacturing companies of the state. The industry of manufacturing of Illinois contributes $96.31 billion to GDP, and it’s a jaw-dropping amount for sure.
- Wholesale trade: No state can be without the wholesale or the retail trade. Even though both these industries are essential, wholesale trade gets a better economy for the state. It represents $55.77 billion to GDP, and it is a good amount.
Illinois LLC Dissolution Review
Time needed: 5 minutes.
Here’s a recap of the steps you must follow when dissolving your Illinois LLC. Click on the steps in this list if you want to read the full detail.
- Follow Your Illinois 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 Articles of Dissolution
File the article of dissolution to make it known to the state where your LLC operates is that you are indeed no longer in business.
What is the Cost to Dissolve an LLC in Illinois
To dissolve an LLC in Illinois you need to file the Statement of Termination with the Illinois Secretary of State via mail or in person for $5.
An LLC or Limited Liability Company is a type of business structure that provides limited liability protection to its owners and members. It is relatively easy to form an LLC in Illinois, but there are costs associated with the dissolution of an LLC.
When an LLC decides to dissolve, the LLC must first file articles of dissolution with the Illinois Secretary of State, paying the associated filing fee. The articles of dissolution must include the LLC’s name, the date of dissolution, the date the LLC was formed, the address of its registered office, and the name and address of the LLC’s registered agent. Depending on the type of LLC, the filing fee for dissolution can range from $150 to $750.
Once the articles of dissolution are filed, the LLC must then notify any creditors. This includes all creditors, including any third-party lenders, who have extended credit to the LLC. The LLC must also provide notice to any other parties the LLC has contracted with, such as suppliers, vendors, and customers.
After providing notice to all creditors and other parties, the LLC must collect and pay all debts and liabilities before the dissolution of the LLC can be finalized. This includes any taxes the LLC owes to the state or federal government. If the LLC has any assets, these must be liquidated and the proceeds distributed to creditors and members in accordance with the LLC’s operating agreement.
If the LLC has any employees, the LLC must also comply with applicable employment laws and regulations, such as providing notice to employees and providing any severance pay or other benefits the employees are entitled to. Additionally, the LLC must provide notice to the Illinois Department of Employment Security, the Internal Revenue Service, and all other government agencies the LLC has been registered with.
Finally, the LLC must file a final tax return with the Internal Revenue Service. The LLC’s assets must also be distributed to members in accordance with the LLC’s operating agreement.
In total, the cost to dissolve an LLC in Illinois can be significant, depending on the size and assets of the LLC in question. The filing fees for dissolution are set by the state and vary depending on the type of LLC. Additionally, the cost of winding up the LLC’s affairs, such as providing notice to creditors and paying off debts, can be significant. Depending on the size of the LLC, the cost of dissolution can be thousands of dollars.
It is also important to note that there are additional costs associated with dissolution, such as the cost of preparing and filing the articles of dissolution and providing notice to creditors and other parties. Additionally, the LLC may have to pay legal fees associated with the dissolution process.
In summary, the cost to dissolve an LLC in Illinois can be substantial. The exact cost will depend on the size and assets of the LLC, as well as any additional costs associated with the dissolution process. Therefore, it is important to consult with a lawyer before dissolving an LLC in Illinois to ensure that all steps are followed and all costs are accounted for.
Yes, in Illinois, there is a fee of $5 to be paid for filing the Articles of Dissolution. Articles of Dissolution must be submitted to the Illinois SOS.
No requirement of revenue department clearance is required until the SOS of Illinois accepts the dissolution form.
The name will also get deregistered with the dissolution of the LLC. But the name will not be allotted for the next 120 days. After that, if some business wants to name their LLC after the name chosen by you, then it is their choice.
If you have not dissolved your LLC, you are liable for business privilege tax, and if it is not paid on time, you are leveraged with 10% of the amount of tax or $50. After that, the additional penalties will increase by $1 per month. If it goes unpaid for a longer duration, then the chances of seizing your property can also recover the tax.
Yes, if you are dissolving your LLC, then you have to pay some amount to the probate judge also who was also present during the time of your LLC formation in the probate office. The minimum fee of the judge is $50, which can vary.
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. Get a professional service to get everything done. We hope this article helps you to close your LLC in Illinois. If you have any query do let us know in the comment box.