Shuttering the doors of your limited liability company (LLC) can be a bittersweet time, sometimes with more bitterness or sweetness depending on the reason for closing. Whatever your reason, there are two specific filings that you must make when closing an LLC in Tennessee. Here’s how to dissolve an LLC in Tennessee, and then file a final termination notice.
LLC dissolution generally refers to the process by which an LLC ceases to be a registered business entity within the state where it operated. The process involves administrative and legal steps that must be completed.
In Tennessee, “dissolution” and “termination” are two different legal steps within the process:
There are a few different types of LLC dissolutions: administrative, judicial and voluntary. These all involve dissolution and termination, but the exact process varies depending on who initiates the dissolution.
An administration dissolution is an involuntary business dissolution initiated by the state, usually for non-compliance with ongoing requirements. You could face this type of dissolution if you fail to file annual reports, don’t pay annual fees, or don’t have a registered agent within the state.
If your LLC faces this situation, you’ll receive a Notice of Dissolution from the Tennessee Department of State. You’ll then have a period to remedy the issue(s), or else the state will proceed with dissolving your business.
(It’s important to make sure your LLC always has a registered agent physically allocated within Tennessee. If you’ve been serving as the agent but are moving out of state, you can use a registered agent service that’s in Tennessee.)
A judicial dissolution is an involuntary business dissolution initiated by a court, usually in response to legal action that’s taken by LLC members, creditors, or a government agency. Members could pursue this if there’s a serious disagreement amongst owners, and creditors might pursue it to collect outstanding debts. A state or federal agency will sometimes seek a judicial dissolution if there’s been fraud or other equally serious misconduct.
If your LLC faces a court-ordered judicial dissolution, the court will oversee the process of dissolving your LLC.
A voluntary dissolution is the type of LLC dissolution that’s initiated by you. This is when the LLC owner(s) decide to close the business, according to the terms set out in their operating agreement or under state law provisions if there’s not an operating agreement in place.
A voluntary LLC dissolution is the most common way to close an LLC in Tennessee.
While there are two official filings with Tennessee, dissolving your LLC involves a few more steps than just submitting the state’s paperwork. Follow these steps if pursuing a voluntary dissolution of your Tennessee LLC.
The initial step is a vote to dissolve your LLC. This is extremely straightforward if you’re the sole owner of a single-member LLC — simply decide to close your business. In a multi-member LLC, it’s necessary to have a vote among the members.
Volting for a multi-member LLC to be dissolved can vary slightly and must be in accordance with any operating agreement in place. Your operating agreement might require a majority or supermajority to dissolve. Tennessee state law requires a majority if there’s no operating agreement in place.
If your LLC has an operating agreement, you’ll want to review the dissolution clause or section carefully. This is a standard section of most LLC operating agreements, but the details it contains can vary.
In addition to stating whether a majority or supermajority is needed, the operating agreement’s dissolution section often also stipulates how assets are divided, contracts are canceled, debts are repaid, and other matters.
Adhering to the stipulations within your operating agreement can help prevent disputes during the dissolution process, and reduce the likelihood of post-dissolution litigation between members.
Before officially filing with the state, first attend to any outstanding business affairs. In general, this entails the following:
You’ll also need to settle debts (see section 3) and pay remaining taxes (see section 4), after which you can close out your business bank accounts. There could be other details that require attention, too.
Send written notice to all known creditors about the LLC’s dissolution, and provide instructions for submitting claims on outstanding liabilities.
Your LLC may have credit card balances, business loan payments, commercial mortgage payments, commercial auto payments, or other outstanding loans that need to be settled. All business debts must be satisfied before any remaining assets can be distributed among members.
You’ll need to settle any outstanding tax obligations, whether federal or state. These include any payroll, property, sales or other tax liabilities that the LLC might owe.
You don’t need to settle your personal income taxes before dissolving your LLC. If taxed as a sole proprietor, still pay your personal income tax as normal. Ideally, that’s through quarterly estimated self-employment tax payments and annual 1040 filing.
File a Notice of Dissolution (Form SS-4246) with the Tennessee Department of State. This is the first of the two official filings that must be made with the state.
The notice requires your LLC name (section 1), how dissolution was decided (section 2), and an optional date for dissolution (section 3). The dissolution is usually effective upon filing, but you can delay for up to 90 days by completing section 3. Of course, the form needs to be signed.
The Notice of Dissolution can be filed by mail, in person, or online. The address is 312 Rosa L. Parks Ave. 6th Floor, William R. Snodgrass Tower Nashville, TN 37243. The process can be done online through the TNTAP platform. The filing fee for the Notice of Dissolution is $20, regardless of how it’s filed.
You should receive back from the state a Certificate of Tax Clearance for Termination/Withdrawal. This confirms that your tax liabilities to the state have been paid, and clears your LLC for termination.
You can complete the final step of filing Articles of Termination after receiving a Certificate of Tax Clearance for Termination/Withdrawal.
Filing Articles of Termination (Form SS-4245) will officially and fully end your LLC. The form requires your LLC name (section 1), the date Articles of Organization were filed (section 2), reason for terminating (section 3), whether creditors have been informed (section 4), and any other pertinent information (section 5). The form must be signed.
The Certificate of Tax Clearance for Termination/Withdrawal that you received needs to be included with the Articles of Termination when you file them.
The Notice of Dissolution can be filed by mail, in person, or online. The address is 312 Rosa L. Parks Ave. 6th Floor, William R. Snodgrass Tower Nashville, TN 37243. The process can be done online through the TNTAP platform. The filing fee for the Notice of Dissolution is $20, regardless of how it’s filed.
Because Tennessee makes a distinction between dissolving and terminating an LLC, it’s important to complete both steps. You’ll need to file a Notice of Dissolution, and Articles of Termination.
If you file for dissolution but not termination, your LLC will still be required to file an annual report and pay the $300 annual fee.
If your LLC is closing, make sure you follow the steps for dissolving a Tennessee LLC. You’ll need to go through the process of voting, attending to business affairs, notifying creditors, and paying remaining taxes. Make sure you then file both a Notice of Dissolution and Articles of Termination. After the articles, your LLC will no longer exist in Tennessee.
You should dissolve your LLC when you cease business operations. Dissolving (and terminating) is the process of ending your LLC’s registration with the state. Failing to go through these steps can result in a continued requirement to file an annual report and pay an annual fee, which is $300 for LLCs in Tennessee.
The total cost of dissolving an LLC in Tennessee is $40. This includes a $20 fee for filing the Notice of Dissolution, and a $20 fee for filing the Articles of Termination. These are paid separately with each filing.
Yes, you can file both the Notice of Dissolution and the Articles of Termination online through the TNTAP platform.
Failing to dissolve your Tennessee LLC means that your LLC is still required to file an annual report and pay an annual fee of $300. There could be other tax and legal liabilities as well.
Dissolving but not terminating your LLC carries many of the same consequences as not dissolving. Your LLC is still required to file an annual report and pay an annual fee of $300. There could be other tax and legal liabilities as well.
If your LLC is registered in multiple states, you must file for dissolution in each state where the LLC was registered to properly end your business operations and legal obligations in those states. Check each state’s particular process for filing articles of dissolution.
This portion of our website is for informational purposes only. Tailor Brands is not a law firm, and none of the information on this website constitutes or is intended to convey legal advice. All statements, opinions, recommendations, and conclusions are solely the expression of the author and provided on an as-is basis. Accordingly, Tailor Brands is not responsible for the information and/or its accuracy or completeness.
Terry is a serial entrepreneur with over 25 years of experience building businesses across multiple industries – construction, real estate, e-commerce, hotelier, and now digital media. When not working, Terry likes to kick back and relax with family, explore Taoism’s mysteries, or savor the taste of fine Italian red wine.
Products
Resources
@2024 Copyright Tailor Brands