Learning how to dissolve an LLC in Wisconsin isn’t that complicated even though there are several steps involved in the process. What’s important is to get it right in order to prevent any potential problems in the future. There’s paperwork that needs to be filed and many loose ends to be tied so that the business is compliantly wound up.
The dissolution process begins once you’ve made the required filings. Regardless of your reasons, the process remains the same for everyone. This guide will highlight everything you need to do to dissolve your Wisconsin LLC.
Understanding LLC Dissolution in Wisconsin
LLC dissolution is the process of winding up a business entity for any reason. It’s important to meet this legal requirement when shutting down your business. Whether you’ve decided to shut it down due to a challenging business environment or simply because you want to pursue another venture, it’s your responsibility to properly dissolve the LLC.
There’s typically a triggering event associated with LLC dissolutions. This is an event or an act after which the LLC must be wound up. For example, if the LLC was set up to own and manage a particular property, it can be dissolved once that property is sold. The triggering event will be detailed in the operating agreement which will also include other considerations.
Wisconsin has some filing requirements that you need to fulfill before your LLC can be dissolved. You’ll also need to pay a filing fee in addition to fees for each year your LLC has had a delinquent status. All the steps that you need to go through are explained in detail below.
Why Dissolve an LLC in Wisconsin?
The decision to dissolve your Wisconsin LLC can be based on a variety of reasons. For example, maybe you just want to start a new venture and would like to wind up your existing one. Maybe the business has been losing money and you can no longer afford to run it at a loss. Those are as good a reason as any to dissolve an LLC.
Business challenges aren’t the only reasons why you might need to dissolve the business entity, though. It could also be due to your LLC being successful in achieving the objective for which it was established. For example, if it was managing a property, you may want to dissolve it once that property has been sold.
Whatever your reason may be, it’s vital that you learn how to dissolve an LLC in Wisconsin the right way. Ensuring that the process is done right will save you from a lot of headaches in the future.
How to Dissolve an LLC in Wisconsin in 7 Steps
The dissolution process is explained in detail below. Make sure you go through all of them carefully to properly understand the process and then take the necessary actions. There are many actions that you need to complete before making the actual filing, so exercise diligence and don’t rush things.
1. Review Your LLC’s Operating Agreement
The first step to dissolving your limited liability company is to study its operating agreement. This is the framework that your entity follows for a variety of tasks, including but not limited to decision-making and dispute resolution. This agreement will also highlight the triggering events for dissolution and the prior actions that need to be completed before filing the paperwork.
Triggering events tend to be unique for LLCs so study your operating agreement to figure out what applies to you. It may also mention the framework for notifying members and calling a vote. Make sure this is followed exactly how it’s supposed to be if you have multiple members in your LLC.
2. Vote to Dissolve an LLC
In the event that your LLC has multiple members, a vote will be required to obtain their approval for the dissolution. A meeting of all members must be convened to take a vote on the proposal to dissolve the LLC. The operating agreement will mention the notice period. For example, you may be required to notify members two weeks before the vote is called so that they can ensure their participation.
Discuss the proposal to dissolve the LLC at the meeting. This is an important formality to complete so that all members are on board. Call a formal vote to confirm their approval and then proceed to the next step which is to get the paperwork in order.
3. File Articles of Dissolution
You need to file the Articles of Dissolution to dissolve a Wisconsin LLC. In addition to the filing fee that’s paid with this form, the state requires you to pay any and all back fees due to the Department of Financial Institutions at the time of dissolution.
You must fill out Form 510, Limited Liability Company Statement of Dissolution and file it with the Wisconsin Department of Financial Institutions either online, in person, or through mail. The information that you need to provide includes the name of the LLC being dissolved, an optional contact person, and the fee.
If your LLC has a delinquent status, meaning it hasn’t filed its annual report for one or more years, you’ll have to pay all the outstanding fees to the Department of Financial Institutions otherwise they won’t process your dissolution.
4. Notify Tax Agencies and Pay the Remaining Taxes
Though some states impose this requirement, you don’t need to obtain a tax clearance certificate in order to dissolve your Wisconsin LLC. This helps move the process along fairly quickly since you’re not stuck waiting for the clearance certificate to arrive before you can make the filing.
It’s a good idea to reveal to the Internal Revenue Service that you’re winding up your LLC. Use the Form 966 to notify the IRS that the LLC has been dissolved. It’s just one loose end to tie up and doesn’t require any fee to be paid.
5. Inform Creditors and Settle Existing Debt
Wisconsin doesn’t require you to notify creditors before dissolving the LLC. However, it’s generally recommended to inform any known creditors before starting the dissolution process. This helps prevent any potential claims from them in the future that you dissolved the LLC without informing them in order to avoid paying the LLC’s debts.
If there are any outstanding debts to be paid, including to members that may also be creditors, this would be a good time to settle them. You can do this even after you’ve filed for dissolution, so long as you make all creditors whole. Avoid the possibility of them claiming in the future that the business was dissolved simply to evade debts.
6. Wind Up Other Business Affairs
This is the part where you tie up all the other remaining loose ends. For example, if your LLC had business licenses to operate in other states, follow the respective processes to cancel them.
Inform your suppliers and customers about the impending dissolution so that they can make arrangements on their end. With your business being wound up, they’ll likely need to look for alternatives. Providing them with enough notice creates that goodwill and leaves the door open for them to work with you again in the future.
There may also be many employee matters that need to be handled. Make sure employees are provided adequate notice so that they have enough time to find alternate employment. Settle any wages that may be due before closing company accounts.
7. Distribute Remaining Assets
After you’ve paid all the creditors, settled any remaining tax liabilities, and ensured that all employees have been paid their dues, go ahead and distribute whatever’s left among the members. This could be physical assets or cash, with the former being disposed of in the manner provided in the LLC’s operating agreement.
It will also include the share percentages of all members. This will ensure that members receive precisely what they’re entitled to, not more and certainly not less. It’s one of the final steps in the dissolution process, so take time to do it properly.
How Much Does It Cost to Dissolve an LLC in Wisconsin?
There’s a $20 filing fee when you submit Form 510 to the Wisconsin Department of Financial Institutions. You’re also required to pay an additional $25 for each year your LLC has had delinquent status. These would be the years when the LLC didn’t file an annual report.
All these fees must be paid through e-check or using a credit card together for the department to process the dissolution.
Should I Dissolve My LLC Myself or Hire an LLC Dissolution Service in Wisconsin?
Knowing what you now know about how to dissolve an LLC in Wisconsin, perhaps you feel that you can go about this entire process on your own. Be that as it may, there’s a reason why most business owners choose to hire an LLC dissolution service.
It’s largely because of the peace of mind that this provides. They know that the people handling the dissolution are professionals and know about all the requirements, even ones that they personally may not be aware of. This ensures that the process is done compliantly and the business owner faces no problems in the future.
Keep this in mind as you begin your journey to dissolve your Wisconsin LLC. It may be more beneficial for you to opt for a dissolution service.
The Wisconsin LLC Dissolution Experts at doola Will Get You Sorted
By choosing the LLC dissolution experts at doola, you can rest assured that the entire process will be done compliantly. All formalities will be completed as they need to be, providing you with complete peace of mind that nothing from the past will come back to derail your future endeavors.
The process begins by first collecting all the required information about your LLC. The Articles of Dissolution are then filed with the State of Wisconsin. If any further information or documentation is required, the experts will proactively reach out to keep the process on track.
You’ll know as soon as the state conveys to them that the LLC has been dissolved. It’s that easy! Try out doola’s LLC dissolution service today and see for yourself how it helps make the lives of business owners across the country easy.
How long does it take to dissolve an LLC in Wisconsin?
It typically takes up to five business days for the Wisconsin Department of Financial Institutions to process an LLC dissolution. However, if you opt for the additional $25 expedited processing, the LLC dissolution will be processed by the close of business on the following business day.
Can I dissolve my LLC without notifying my members in Wisconsin?
If your LLC has multiple members, you may be required to notify them about the impending dissolution. A vote may need to be called if required by the operating agreement for all members to approve the dissolution proposal.
Can I dissolve my LLC if I have pending lawsuits in Wisconsin?
If you have pending lawsuits in Wisconsin you can dissolve your LLC, however, that’s not going to have any impact on the status of those lawsuits. They will continue even when your LLC has been dissolved.
Can I cancel my EIN once my LLC is dissolved in Wisconsin?
EINs are not canceled. The IRS assigns these unique numbers to business entities in perpetuity. So even if the LLC is dissolved, that EIN remains unique to that entity, as EINs are never reassigned or reused.
What happens if I don’t properly dissolve my LLC in Wisconsin?
You could be liable for any unpaid debts or taxes of the LLC if it’s not dissolved properly. This is why it’s so important to make sure that the process is done formally and compliantly to avoid any such issues in the future.
Can I reopen a dissolved LLC in Wisconsin?
You can apply for reinstatement of your Wisconsin LLC by contacting the DFI via email. In addition to filing the relevant form, you’ll also need to pay a $100 filing fee as well as a $40 fee for each late LLC annual report.