The day may come when it is time to close your Florida limited liability company (LLC). Whatever the reason for ending an LLC, careful attention should be made to ensure dissolution is done correctly. Florida has a series of laws that – in conjunction with your operating agreement – govern how to dissolve an LLC in Florida.
The business of closing your business involves several administrative steps and coordinating with other professionals, related parties, and members of the LLC. This article provides a general overview of the LLC dissolution process along with answers to common questions that business owners have on the topic.
If you instead need to know how to close a corporation, see our page on how to dissolve a corporation in Florida.
Here’s How to Dissolve an LLC in Florida
The process for how to dissolve a Florida LLC involves a few steps overseen by the division of corporations within the secretary of state. Some of the steps are simple and stay the same regardless of the nature of the Florida LLC dissolution. However, some of the steps can become increasingly complex depending on the business and the nature of its assets and liabilities.
1. Have a Dissolution Event
The first step to dissolving an LLC in Florida is to have a qualifying event occur that allows dissolution. Florida law lists several qualifying events that are either a voluntary dissolution or an involuntary dissolution. They include:
- The occurrence of a condition written in the LLC’s operating agreement
- The consent of all the LLC’s members
- A situation where the LLC does not have a member after 90 days
- A court order for judicial dissolution
- The filing of an administrative dissolution (this usually happens when an LLC forgets to file annual reports or pay required fees to operate). If your LLC was administratively dissolved, solutions exist for reinstatement.
2. Repay the LLC’s Debts and Obligations
While operating an LLC, you’ll likely assume various debts and other obligations. This could be a bank loan, a lease, outstanding payments to suppliers and manufacturers, etc. The LLC must repay these debts before making any final distributions to members and dissolving the business. Failure to repay an LLC’s debts during dissolution can cause the LLC’s members to become personally liable. Another part of the debt repayment step is giving written notice to known and unknown creditors of the LLC’s dissolution. Florida requires notice to protect creditors and claimants from losing any recourse they may have against the company.
3. Wind Up Current Business
The LLC will likely have ongoing items of business to finish during the dissolution process. You may have contracts to complete, purchase orders to fulfill, payments to collect, and other tasks that are in the ordinary course of the business.
Another part of the wind up is selling all of the LLC assets. The sale of assets pre-dissolution can take some time depending on the situation. You may need one or more appraisals to determine the fair market value of assets and comply with other requirements for selling assets under the Florida LLC operating agreement. The tasks of winding up a business might also need to happen in the other states where the LLC does business (e.g., filing dissolution articles as a foreign LLC).
4. Do a Final Distribution to Members
After liquidating the LLC’s assets and repaying creditors, the next step is to do a final accounting and do a final distribution to members. Working with an accountant and lawyer in this step can be helpful to ensure the distributions are accurate based on the terms of the operating agreement, Florida law, and the members’ ownership interests.
5. File Articles of Dissolution
One of the last steps of dissolving an LLC in Florida is filing articles of dissolution to notify the state that the LLC is no longer in existence. The articles of dissolution are similar to the articles of organization you filed to establish the LLC, which includes information such as the LLC name, names of members, the dissolution effective date, and the reason for dissolution.
6. Administrate Post-Dissolution Matters
After the LLC date of dissolution, issues may arise that require further administration. An example could be distributing received payments or resolving claims against the LLC. Florida allows dissolved LLCs to exist after the date of dissolution solely to administer these final matters. Additionally, you’ll have to prepare final tax returns with the IRS.
Other Info on How to Close an LLC in Florida
Below is some additional information to further enhance your understanding of the LLC dissolution process in Florida.
What is the Cost to Dissolve an LLC in Florida?
The cost to dissolve an LLC in Florida will vary from business to business based on the assets and other administrative needs. A limited liability company will generally incur expenses for legal, accounting, and other services (e.g., appraisers, brokers, etc.). Additionally, small filing fees exist for filing articles of dissolution and other forms with the state.
Is My Info Still Public After Dissolving an LLC in Florida?
Information about the LLC may remain public with the state of Florida after dissolution.
When Can You Dissolve an LLC in Florida?
As mentioned above, you can dissolve an LLC in Florida when a dissolution event occurs such as the written consent of the members or a court order to end the business.
Can LLC members take each other to court?
A lot of our clients want to know, can LLC members sue each other, or are there legal problems that require filing a lawsuit against one or more LLC members.
In short, yes. LLC members can take legal action against one another. The most common reason for LLC members to seek court intervention is when two members with equal voting power become deadlocked on a material issue. For example, one member with 50% voting power may want to dissolve the LLC, while the other member with 50% voting power is against such dissolution. In the absence of tie-breaking clause in the operating agreement, the parties will need to take legal action for the court to resolve the impasse.
How to Dissolve a Business in Florida Online
More information on how to close a company in Florida online, and online filings for the articles of dissolution are available by following the secretary of state’s online instructions at sunbiz.org.
Need Help Closing a Business in Florida?
Cueto Law Group is a Miami-based, boutique law firm whose attorneys handle matters involving commercial transactions and litigation. The firm – founded by international business attorney, Santiago Cueto – regularly provides legal advice to clients on matters related to dissolving LLCs and other entities.
If you need help with administering your Florida LLC’s dissolution, please do not hesitate to contact our office. We can schedule a consultation to learn more about your legal needs and how Cueto Law Group may help.
Contact Cueto Law Group today to schedule a consultation for dissolving your LLC in Florida.
FAQs on How to Close a Business in Florida
Answers to a couple of other common questions concerning an LLC’s dissolution in Florida.
How Long Does Dissolving a Florida LLC Take?
The amount of time it takes to dissolve an LLC fluctuates from business to business. The actual processing of the articles of dissolution only takes a few days. However, the other steps of repaying debts, selling assets, filing taxes, and distributing liquidated proceeds to members can take months or longer.
Are There Any Penalties if You Don’t Dissolve an LLC Properly?
The consequences of incorrectly dissolving an LLC can be substantial. You may have exposure to lawsuits from creditors, members of the LLC, or other interested parties. Tax liability and penalties are another risk. Errors can easily occur due to an improper sale of assets or distribution to members.
