I am a single member llc and no longer wish to be an llc. How do I dissolve my llc back to just a sole proprietorship?


Answer

Every state is a little different, but generally the first step to dissolving your LLC is to review the operating agreement for the dissolution procedures if you have them.  Most single member LLCs don’t have an operating agreement so they can skip this step.

Next, you will need to notify your Secretary of State (or similarly named state agency), by filing a certificate of dissolution, certificate of cancellation, or articles of dissolution.

If there are any creditors, they will need to be notified and how they can submit claims for payment.  The value of formally dissolving your LLC, and publishing notice of its dissolution (if required by your state), is that you begin the statute of limitations clock for any claims against the LLC or you as a member of the LLC. If all your creditors are paid up, then this is a step you can skip as well.

After all government taxes and creditors have been paid, the remaining assets are distributed to the LLC’s members.  Assets of the LLC must be distributed proportionately according to the ownership interest of each member unless otherwise stipulated in the operating agreement.

LegalZoom has a service that will dissolve your LLC for you inexpensively and make sure all the procedures are followed in your state.

Go to the bottom right of the page, under “Additional Business Services” and click on ‘Dissolutions’.

The state fees vary from state to state.

Be aware that once your LLC is dissolved, if you continue to operate your business under your own name, you could be held personally liable for debts of, and tort claims against, the business.

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