How to Close down an LLC in Florida
Businesses can close down for any number of reasons, from changing market conditions to key participants receiving better opportunities. When LLC owners recognize these changing circumstances and choose to close down their companies, it is important for them to go about it the proper way. Failing to dissolve an LLC in an appropriate manner can lead to additional administrative costs and potentially result in increased liability. Consequently, it is important for LLC members to follow their own internal procedures for dissolution, take the appropriate administrative steps, and ensure that they complete the wind up duties laid out in the Florida LLC Act.
Internal Procedures
The first step to closing down an LLC is taking the necessary internal steps to dissolve the business. These procedures are usually set out in the LLC’s operating agreement, and can take a variety of different forms. Some LLC operating agreements contain other provisions for triggering dissolution, such as when a certain time period expires or after listed events occurred. Alternatively, most LLC agreements will have a provision allowing the members to vote on dissolution. Ordinarily, those votes will come with certain procedural safeguards such as advance notice of the vote or the need for a supermajority to dissolve the company. It is important to carefully follow those procedures to avoid disputes among the LLC’s members about the dissolution.
Administrative Steps
A dissolved LLC also needs to take the administrative step of delivering its Articles of Dissolution to the Florida Department of State. Those Articles inform the state that the company has been dissolved and they also make certain representations such as that the duties to wind up have been properly carried out and that there are no lawsuits currently pending against the LLC. Members may choose to post date the Articles so that they go into effect later than their filing date. However, that effective date must be within 90 days of filing.
Duties to Wind up
One of the most important parts of dissolving an LLC is ensuring that the duties to wind up are properly carried out. These duties are laid out in Florida law, and exist to ensure that the LLC’s obligations to members and third parties are properly taken care of before the company ceases to exist. Generally, the most important of the duties to wind up is ensuring that the LLC’s debts and other liabilities are properly taken care of before the company dissolves. Winding up also involves making sure that the company’s activities come to a proper close, and that any of the company’s assets are distributed appropriately to shareholders. The law also provides a variety of discretionary things that the company may do during its wind up, such as defend against ongoing lawsuits or sell property that the members to not want to take directly.
Winding up a business is a difficult task, and if done improperly can lead to lawsuits by LLC members or creditors of the LLC. If you are involved in a dispute that arose out of a company wind down, contact a Florida business litigation attorney today. The attorneys at Pike & Lustig, LLP are happy to provide assistance.
