Perhaps it’s the end of a business journey that has brought you to this guide on how to dissolve an LLC in Massachusetts or the beginning of a new venture that requires tying loose ends. Whatever your reasons may be, this guide will walk you through everything you need to know to completely dissolve your Massachusetts LLC.
Do keep in mind that it’s very important to go through this process properly. You wouldn’t want to deal with any headaches down the line, particularly not when you’ve established your new business venture. Once you take care of this process as it’s supposed to be, you can have the peace of mind that this chapter is closed for good.
Understanding LLC Dissolution in Massachusetts
Do you recall the steps you took when setting up your Massachusetts LLC? You chose a name, assigned a Massachusetts registered agent, filed the required documents, etc. All that was done to register your business with the Commonwealth of Massachusetts. There’s a similar formal process to follow when you want to end the LLC’s existence as a state-registered business entity.
LLC dissolutions usually begin with a triggering event. For example, the operating agreement might mention the circumstances in which the LLC should be dissolved. A member vote is also a triggering event, whereby the members of the LLC vote to voluntarily dissolve it.
As is the case with every state, there are some requirements specific to Massachusetts. You’ll be required to file a document confirming your intention to dissolve the LLC. There will be some other steps to follow as well that we’ll describe in detail below.
Why Dissolve an LLC in Massachusetts?
Every business owner is going to have a different reason for dissolving their Massachusetts LLC. Your’s will be unique to you. It could be due to a challenging business landscape that’s forcing you to shut your doors. Nobody likes running a business at a loss, after all. Maybe you don’t get the sense of fulfillment that you once did from this business and just want to close it.
It could also be due to the fact that you’re starting a new business venture and want to close the one you already have just to get a fresh start. It’s always recommended to start new ventures under a separate LLC anyway.
No matter what reason you have for learning how to dissolve an LLC in Massachusetts, it’s vital that you realize just how important it is to get this process right the first time around. You don’t want any headaches stemming from a dissolved LLC to follow you around in the future.
How to Dissolve an LLC in Massachusetts in 7 Steps
By following the steps detailed below, you’ll know everything you need to do in order to dissolve your Massachusetts limited liability company. Carefully go through all the steps to understand the process and then do what’s necessary to get the ball rolling.
1. Review Your LLC’s Operating Agreement
When you were setting up your LLC, you would have had a document called the operating agreement. This document provides a framework that business entities follow for their operations. Not only will your operating agreement mention the triggering events due to which dissolution has to take place, but it will also provide guidelines on how to go about getting the required votes from all members if your LLC has multiple members.
Take time to truly understand what’s laid out in your operating agreement. Make sure you follow the process as it’s highlighted there. For example, it may require advance notice to members so that they can ensure their participation in the formal vote. Go by the manner and methods provided in the agreement for smooth sailing.
2. Vote to Dissolve an LLC
Massachusetts requires the consent of all members for LLC dissolution if the operating agreement doesn’t provide any specifics on how the business entity is to be dissolved. For example, your LLC’s operating agreement might say that two-thirds of the LLC members must vote in favor of the dissolution process to begin.
In the absence of any such clear directive, the default law in Massachusetts is that all members must unanimously vote for the dissolution. Provide all members with adequate notice so that they can participate in the vote.
During the meeting, discuss the proposal to dissolve the entity thoroughly and then call for a formal vote. Record the decision to approve the dissolution accordingly. This ensures compliance with all directives and the default law in the commonwealth.
3. File Articles of Dissolution
To dissolve your Massachusetts LLC, you’ll need to file a Certificate of Cancellation with the Corporations Division of the Massachusetts Secretary of the Commonwealth. There is no standardized form, so you’ll need to draft the certificate and provide the required information.
This includes the name of the limited liability company, its EIN, the date of filing of the original Certificate of Organization, the reason for filing the certificate of cancellation, the effective date of cancellation, and any other information you may wish to provide.
To make it simpler, the state does provide an online filing system where you can create a certificate that includes all the aforementioned information. It’s also possible to submit it online. You’ll need to pay a $100 filing fee for the dissolution application to be processed.
4. Notify Tax Agencies and Pay the Remaining Taxes
Unlike other states, there’s no requirement for a Massachusetts LLC to obtain a tax clearance certificate from the commonwealth’s Department of Revenue. You won’t need to file for and then wait for this certificate since it’s not required, thereby the process will be more swift.
What is required is that there shouldn’t be any pending dues related to the LLC’s annual reports. If it has been delinquent or hasn’t filed its annual reports for some time, make sure to pay those fees so that your Certificate of Cancellation is accepted for processing.
You should also take some time to inform the IRS about the LLC’s dissolution just to tie up this loose end. You can do that by filing the Form 966 with the Internal Revenue Service.
5. Inform Creditors and Settle Existing Debt
There’s no requirement in Massachusetts to inform creditors about your desire to dissolve the limited liability company. However, it’s recommended that you notify any known creditors so that they can’t claim at any point in the future that you dissolved the LLC on purpose to get out of paying the LLC’s debts.
Inform and negotiate with creditors to settle any existing debt. This is to make sure that these financial liabilities don’t continue to be a drag on your life even after you’ve dissolved the LLC. It will also make sure that any future endeavor you embark on won’t be disturbed by claims stemming from a business that no longer exists.
6. Wind Up Other Business Affairs
You likely have considerable business operations that need to be wound up as the LLC is being dissolved. There may be many suppliers that need to be informed so that they can manage things on their end. Sort out any payables and receivables so that the accounts can be squared off.
Be particularly mindful of customers who have been relying on your products and services. Give them enough time to find alternatives so that their lives aren’t disrupted by the closure of your business. If you’re holding on to their money in subscriptions or accounts, work out a resolution with them.
You may have also obtained business licenses, particularly to run operations in other states, so this will be the time to cancel those licenses and permits as well. The process for each is going to be different. Take the time to learn the process for each of them and follow it to tie up this loose end as well.
If you have employees, consider it a responsibility to let them know with enough notice so that they can find work elsewhere. You don’t want them to suddenly find out that they no longer have a job. If any wages or dues remain unpaid, make sure that you pay them before the company’s bank accounts are closed.
7. Distribute Remaining Assets
It’s only once all the liabilities have been settled and no other obligations remain can you focus on distributing whatever assets the LLC has left among its members. These could be physical assets or cash. Study the operating agreement for the manner and method in which these distributions are to be made.
The operating agreement will likely mention the shares of each member as well. These are set out so that every member receives precisely what they’re supposed to get, not more and not less. Follow the process mentioned in the agreement to ensure equitable distribution of the LLC’s assets.
How Much Does It Cost to Dissolve an LLC in Massachusetts?
It costs $100 to dissolve your Massachusetts LLC. This filing fee must be paid when you’re filing the Certificate of Cancellation with the Secretary of the Commonwealth. You can pay it online if submitting the form through the aforementioned system or by check.
Should I Dissolve My LLC Myself or Hire an LLC Dissolution Service in Massachusetts?
Once you follow all the steps in his guide on how to dissolve an LLC in Massachusetts, there’s no reason why you shouldn’t be able to do everything on your own, but would that be the best way to go about this?
The main reason why most business owners opt for a professional LLC dissolution service in Massachusetts is that their peace of mind is guaranteed. They know that everything will be done professionally by people who know what the process entails and they won’t miss anything.
This way, they can rest assured that nothing will go wrong and that there won’t be any problems stemming from improper dissolution in the future. This allows them to focus on their next steps without having to worry about a business entity that they’ve closed the chapter on.
How doola’s Massachusetts LLC Dissolution Experts Make Your Life Easier
The LLC dissolution experts at doola take care of the entire process from start to finish, allowing you to focus on your next steps while this crucial task of dissolving your Massachusetts LLC is handled properly and compliantly.
You just need to provide some information about your limited liability company and we handle the rest. From drafting the Certificate of Cancellation to making all the required filings, nothing slips through the cracks, so your ultimate peace of mind is guaranteed.
After it’s all done and the state confirms to us that the LLC has been dissolved, we’ll immediately let you know, so that you can look to the future and all the great things you’ll achieve in it.
How long does it take to dissolve an LLC in Massachusetts?
When you submit the Certificate of Cancellation for your LLC online, the Corporations Division of the Massachusetts Secretary of the Commonwealth will process it within 3 to 5 business days.
Can I dissolve my LLC without notifying my members in Massachusetts?
The default Massachusetts law is that all members need to vote unanimously in favor of the dissolution. This means that you can’t dissolve your LLC without notifying the members, since their votes are necessary for the dissolution process.
Can I dissolve my LLC if I have pending lawsuits in Massachusetts?
While you can dissolve your LLC in Massachusetts if it has pending lawsuits, that does nothing to stop those lawsuits from proceeding. The legal actions will continue even after the LLC stands dissolved.
Can I cancel my EIN once my LLC is dissolved in Massachusetts?
The Internal Revenue Service doesn’t cancel EINs. These unique numbers remain associated with the business entity to which they were originally assigned. So when you dissolve your LLC, you don’t need to worry about canceling the EIN.
What happens if I don’t properly dissolve my LLC in Massachusetts?
There could be issues stemming from the improper dissolution of an LLC in Massachusetts, such as being liable for unpaid debts and taxes of the business. It’s vital to do this process properly the first time around to prevent any such issues in the future.
Can I reopen a dissolved LLC in Massachusetts?
You can reinstate an LLC in Massachusetts by filing the Application For Reinstatement with the Secretary of the Commonwealth. This application has a $100 filing fee. All annual reports that were missed need to be filed as well with an additional fee of $500 for each report.