A business entity typically ends its existence by being “dissolved” after an event occurs that mandates dissolution, or when the purpose of forming the LLC has reached its end. A court can dissolve an LLC in Florida for failure to comply with state laws or failure to pay its taxes.
More common, however, is judicial dissolution as a result of a lawsuit brought by disgruntled LLC members who wish to unravel their business ties. An LLC in Florida is expected to file Articles of Dissolution. An LLP may file a Statement of Dissolution and a Limited Partnership or LLP shall file a Cancellation of Certificate of Limited Partnership.
Aside from the Articles of Dissolution being a legal requirement, there are many practical reasons why a business should ensure it is properly dissolved in the state of Florida. Note that until a business is officially dissolved, its owners or managers continue to bind the business by their actions.
Filing Articles of Dissolution in Florida constitutes a well-publicized notice of dissolution and thereby a limitation of authority. This will prevent third parties from enforcing new obligations against the business.
Owners might be inclined to, for example, forego filing an annual report and allow the Secretary of State to administratively dissolve the business, but doing so will cause the entity to go into “bad standing” with the state and serve as evidence that formalities were being ignored.
Recommended: Benefits of an LLC in Florida [Pros and Cons]If you and other company members decide to dissolve your LLC, it is very important to address the necessary steps; otherwise, you could face administrative consequences and additional challenges associated with the dissolution of your Florida LLC.
majority of Florida LLCs function under an operating agreement, although it is not technically required. This document is an agreement between the owners or members of a Florida LLC regarding how they will run the business.
If present, the operating agreement will govern how and when dissolution should occur. For example, an operating agreement may say that dissolution occurs if one of the founding members dies. Regardless of what it says specifically, make sure you review your LLC’s operating agreement before proceeding with dissolving an LLC in Florida.
Please note that for LLCs without an operating agreement, the Florida Revised Limited Liability Company Act provides some default options. Generally, this Act permits dissolving an LLC in Florida:
Recommended: How to Reactivate an LLC in Florida [Reinstatement Fee]Florida law requires LLCs to distribute their assets in a particular order while winding up. As a result, you must follow this order correctly to avoid potential legal liability. It is important to note that, the LLC must use its assets to discharge its obligations to creditors, including any remaining taxes owed.
A creditor can be anyone outside the company to whom a debt is owed or any member who made personal loans to the company. Please note that an essential part of how to dissolve an LLC in Florida is properly handling these claims. There are specific notice requirements for known and unknown claimants you must follow.
After you must have paid off all debts, the next step is to distribute the remaining assets to the members of the company. That is if there are still assets left over after paying all creditors, distributing those assets to the LLC’s members is the next step in LLC dissolution.
Recommended: What is a Registered Agent for an LLC in Florida?If this is the case for your LLC, make sure to properly close out these foreign registrations during the Florida LLC dissolution process. Please note that each state handles foreign business entities differently, so make sure to check each relevant state’s laws for specifics.
The last step to take when dissolving an LLC in Florida is to file the articles of dissolution with the Florida DOC. An article of dissolution is a document that is filed to effect and formalize the cessation of an incorporated organization. In other words, it is an official document filed before the dissolution of a partnership or corporation which mentions the provisions for the distribution of assets.
Interestingly, Florida offers online or paper filing with a fee of $25. There may be additional fees for certified documents. Please note that the Florida DOC strongly recommends hiring legal counsel before submitting any documents.