By The Wyoming LLC Attorney TeamFeb 11, 2022
Dissolving a Pennsylvania LLC involves ending its legal existence, with reasons such as selling assets, transferring ownership, or financial struggles. The process includes unanimous voting, filing dissolution forms, canceling permits, handling debts, and asset transfer. It takes 30-60 days, with asset distribution and liabilities settlement within 90 days. Consultation with an attorney is advised for a smooth dissolution.
Dissolution can be a fairly straightforward process if you work with an experienced attorney. But what do they entail, and what exactly does the term mean? Read on to find out.
In the US, an LLC, otherwise known as a Limited Liability Company , is a business structure that combines the tax advantages of a partnership or sole proprietorship with the limited liability features of a corporation. Although it is named a Limited Liability Company, you might also see it referred to as an S Corporation, C Corporation, or Limited Liability Limited Partnership (LLLP). It is called any number of things because it is not classed as a particular type of business entity like corporations are.
The Federal Tax Code allows for any number of personal services businesses—like doctors, lawyers, and accountants—to be structured as professional corporations. These plans require shareholder meetings and annual audits plus ongoing maintenance fees every year thereafter. Many small business owners choose to form an LLC as it requires less paperwork than creating a corporation. This offers protection from personal risk too, so if something goes wrong with their company, they will not lose everything they own.
If you dissolve an LLC, this means it will no longer exist as a legal entity. As such, it's unable to continue trading. Dissolving a Pennsylvania LLC involves filing the appropriate paperwork with the state, but the exact process varies based on where you live.
To begin this process, all of the remaining employees or members of the company must take part in what is known as voluntary dissolution, whereby they are required to cast a vote to say if the company should be dissolved or not. This frequently occurs when a circumstance arises out of their control, such as the loss of a key employee.
Similarly, the LLC might cease to become economically viable, or its purpose might be completed. Other times, the employees might be uncomfortable with how the LLC is operating, so see its continuation as too risky. In this case, terminating the company would be the most beneficial route to go down.
There are a number of reasons for dissolving an LLC in Pennsylvania, including:
If your company is not serving you any longer, then it might be time to file for dissolution. Doing this is a great way of selling your company. Once the dissolution has occurred, you will be able to sell your business to a new owner, which can reap a good amount of money.
Transferring ownership of a business is best done when you file for dissolution. By doing so, you can allow the new owner to have a new start, setting up the business under their own name and with different policies. They might not want it to be under the LLC's terms, so by dissolving, you open it up to someone else’s vision and creative freedom.
Whilst this is a difficult decision to make, if your company is facing financial difficulties and cannot afford to keep up with its expenses, it might be time to dissolve. These circumstances can't be helped, and it is much safer to disband than to carry on a lost and hopeless prospect.
If your company can't pay its debts, or if you're found to be engaging in illegal activities, then the state could file for involuntary dissolution to protect the public from fraud or other abuses. However, if this happens, you will be liable for all of the problems your company has caused, and you will be required to handle all of the adverse consequences of its sudden collapse.
Remember, if you think your company is struggling, then make sure to file a voluntary dissolution before you get to this stage.
Dissolving a Pennsylvania LLC is a fairly simple process. But there are a few steps involved:
The fee for dissolving a Pennsylvania LLC is roughly around $100, which must be paid when filing your Certificate of Dissolution form. Once you have completed and filed your form, send copies to each member of your company by certified mail, as you will want them to be aware of the decision that has been made.
You should also send a copy to any creditors who might have outstanding claims against the business or its assets before letting go of it completely. This gives them an indication of the dissolution, so they can take action to reclaim their money.
LLC dissolution can be initiated online with the Secretary of State's Office. Once you have submitted your papers, it will take between 30 and 60 days for your LLC to be dissolved in Pennsylvania, as long as there are no issues with your request.
Dissolving an LLC is a pretty straightforward process once you know what steps need to happen.
The Secretary of State requires that all remaining assets be distributed to shareholders or sold off within 90 days after filing for dissolution, and then your liabilities will be extinguished.
Once dissolved, the LLC must also liquidate its assets, which refers to the process of passing them over to a new owner. All non-monetary related items will be auctioned off, and any remaining cash must be returned to the bank, particularly if the money was originally taken out as a loan.
Alternatively, you can share assets amongst the team members who were part of the LLC. This can help to ensure that employees are compensated fairly if they are going to be out of work and that any borrowed items are returned to their rightful owners.
The company can be reopened again upon request, as long as the dissolution has not exceeded the state's maximum time limit, so be sure that this is the right decision for you before going ahead with the filing.
If you're prepared to dissolve your Pennsylvania LLC and require legal assistance, please initiate contact by filling out the provided form or dialing +1 (307) 683-0983.