How to Dissolve an LLC in Illinois

Dissolving a business often involves complex procedures. However, for a limited liability company in Illinois, dissolving it takes a handful of paperwork. When an LLC is formed in Illinois, 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 Illinois. LLCs must file the Articles of Dissolution with the Illinois Secretary of State like the formation certificate was filed at the time of forming an LLC in Illinois. 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: Illinois 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 Illinois LLC requires three broad procedural steps. Having a Illinois LLC Operating Agreement, closing all the tax accounts, and finally submitting the Articles of Dissolution form to the Illinois Secretary of State.

Step 1: Follow the LLC Operating Agreement in Illinois

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 Illinois.

Get a Professional Agent Service

When it comes to a limited liability company dissolution, it is important to get professional help. 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 in Illinois that we strongly recommend for you.

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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 Illinois 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 Illinois to file the BOI Report. The Beneficial Ownership Information (BOI) in Illinois 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 Illinois Articles of Organization, one has to file Illinois LLC Articles of Organization. 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 Illinois Secretary of State physical office along with the state filing fee.
If you want to dissolve Illinois 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	LLC Terminal/Withdrawal
Offline Applications	Statement of Terminal
SOS Contact (if offline application is available)	Department of Business Services, Limited Liability Division, 501 S. Second St., Rm. 351, Springfield, IL 62746
Filing Time	7 to 10 working days.
Filing Fee	$5

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 Illinois

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.

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 Illinois include 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 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 Illinois, you can reinstate or revive the same within a given time. In Illinois, the LLC name will be available up to 3 years. After this, the name will be available to other LLCs. Besides, you might revive or reinstate the LLC in Illinois if that is available. According to the Illinois SOS, you can revive your LLC anytime as there is no time limit for reinstatement. but after 3 years the name will be gone so you need to file an amendment document..

Reasons Behind Dissolving an LLC in Illinois

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 Illinois, 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 Illinois

With the population of 12,807,072, Illinois is one of the favorable places to start an LLC. According to several reports, starting an LLC for Language Courses 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 Illinois.

Language Courses
Clothing Sales
Customized Tours
Agriculture
Information Technology

Illinois LLC Dissolution Review – A Quick Recap

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 details.

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 Organization: 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 Illinois?

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

Can I dissolve my Illinois LLC online?

Yes, you can dissolve your Illinois LLC online through the Secretary of State’s website.

What is the filing fee to dissolve an LLC in Illinois?

The filing fee to dissolve an LLC in Illinois is $100.

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

Yes, you will need to notify the Illinois Department of Revenue when dissolving your LLC.

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

The process of dissolving an LLC in Illinois can take approximately 5-7 business days.

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

Administrative dissolution occurs when the state dissolves an LLC for failure to comply with certain requirements, whereas voluntary dissolution is initiated by the LLC’s members.

Can I dissolve an Illinois LLC if it has outstanding debts?

Yes, you can dissolve an Illinois LLC with outstanding debts, but it is recommended to settle those debts before dissolution.

Do I need to notify creditors before dissolving my Illinois LLC?

Yes, you should notify your creditors before dissolving your Illinois LLC.

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

Yes, you may be able to reinstate your Illinois LLC after it has been dissolved, but the process can be complex.

Are there any tax implications when dissolving an LLC in Illinois?

Yes, there may be tax implications when dissolving an LLC in Illinois. It is recommended to consult with a tax professional.

Can I dissolve an LLC in Illinois without a unanimous vote from all members?

The specific requirements for dissolving an LLC in Illinois may vary based on the operating agreement. Check the operating agreement for details on dissolution procedures.

Can I dissolve my Illinois LLC if it is involved in ongoing lawsuits?

Dissolving an Illinois LLC that is involved in ongoing lawsuits may complicate the legal process. It is recommended to consult with an attorney.

Do I need to submit a final tax return for my dissolved Illinois LLC?

Yes, you will need to submit a final tax return for your dissolved Illinois LLC.

What happens to my Illinois LLC’s assets when I dissolve it?

Upon dissolution, the assets of your Illinois LLC will be distributed to creditors and members according to state law and the LLC’s operating agreement.

Is there a grace period to reinstate a dissolved Illinois LLC?

There may be a grace period to reinstate a dissolved Illinois LLC, but the specific timeframe can vary. Check with the Illinois Secretary of State for details.

Can I transfer assets before dissolving my Illinois LLC?

Yes, you can transfer assets from your Illinois LLC before dissolving it, but it is recommended to consult with a legal professional to ensure all transfers comply with state law.

Do I need to publish a notice of dissolution for my Illinois LLC?

The requirement to publish a notice of dissolution for an Illinois LLC may vary based on county regulations. Check with the county clerk’s office for specific requirements.

What information do I need to provide when dissolving my Illinois LLC?

When dissolving your Illinois LLC, you will need to provide the name of the LLC, the date of dissolution, and other relevant details as required by the Illinois Secretary of State.

Can I dissolve my Illinois LLC if it has no business activity?

Yes, you can dissolve your Illinois LLC if it has no business activity, but it is recommended to follow the proper steps for dissolution as required by state law.

Is there a penalty for failing to dissolve an Illinois LLC properly?

Failure to properly dissolve an Illinois LLC may result in penalties, including legal consequences and continued tax obligations.

Can I dissolve my Illinois LLC if it is in good standing?

Yes, you can dissolve your Illinois LLC even if it is in good standing, but it is important to follow the proper procedures for dissolution.

How do I notify the Illinois Secretary of State of my LLC’s dissolution?

You can notify the Illinois Secretary of State of your LLC’s dissolution by filing articles of dissolution through their online portal or by mail.

Can I dissolve my Illinois LLC without the consent of all members?

The specific requirements for dissolution of an Illinois LLC may vary based on the operating agreement. Consult the operating agreement for details on dissolution procedures with the consent of members.

Do I need to cancel business licenses and permits when dissolving my Illinois LLC?

Yes, you should cancel any business licenses and permits associated with your Illinois LLC when dissolving it.

Can I dissolve my Illinois LLC if it is delinquent on annual reports?

Yes, you can dissolve your Illinois LLC if it is delinquent on annual reports, but you may need to bring the reports up to date before dissolution.

Do I need to cancel my EIN when dissolving my Illinois LLC?

If you have an EIN for your dissolved Illinois LLC, you should notify the IRS of the dissolution and cancel the EIN.

Can I convert my Illinois LLC to a different business entity instead of dissolving it?

Yes, you may be able to convert your Illinois LLC to a different business entity, such as a corporation or partnership, rather than dissolving it.

What is the effective date of dissolution for an LLC in Illinois?

The effective date of dissolution for an LLC in Illinois is the date on which the articles of dissolution are filed with the Illinois Secretary of State.

Can I dissolve my Illinois LLC if it has a remaining business lease?

Yes, you can dissolve your Illinois LLC if it has a remaining business lease, but it is advisable to properly terminate the lease agreement before dissolution.

What is required to file the Articles of Dissolution in Illinois?

In Illinois, the Articles of Dissolution must be signed by a manager, member, or officer of the LLC and submitted to the Secretary of State.

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.