Dissolving an LLC in Alaska: What you Need to Know

Closing your Alaska LLC? Whether you’re moving on to a new venture or wrapping up operations, you’ll need to officially dissolve your business with the state. In this guide, we’ll walk you through the steps to dissolve an Alaska LLC properly, so you can avoid penalties and close things out cleanly.

When a limited liability company is financially unsuccessful, has served its purpose, or you simply don’t wish to run it anymore, it’s time to close it down. However, you can’t just stop providing goods and services and walk away. You need to conduct a process called dissolution, which ends your LLC’s existence in a legal and orderly manner.

Read on for a discussion of possible reasons for dissolving an LLC, the different types of LLC dissolution, and the steps and requirements for dissolving an LLC in Alaska.

Basics of LLC Dissolution

Hanging a “closed” sign on your office, storefront, or factory door doesn’t make the closure final and legal. Unless you terminate the business with the proper steps for an Alaska dissolution, the state will regard you as an ongoing business and will continue to expect required reporting and franchise fees.

Dissolution is the act of officially dissolving your LLC with your registered state. A significant step in that process is filing a certificate of dissolution with the Alaska Secretary of State. Once the dissolution application is accepted, your LLC is no longer active in Alaska, and it has no further obligations to the state.

To ensure the dissolution is accepted, you have to complete some other tasks. These include winding down business activities, settling outstanding debts, finalizing filings with tax and employment authorities, selling LLC assets, and distributing the proceeds to the members.

Types of LLC Dissolution

Dissolution falls into three categories: administrative, judicial, and voluntary.

Administrative dissolution

Administrative dissolution is when the state dissolves an LLC due to the LLC’s failure to meet its obligations.

Administrative dissolution can happen in Alaska when:

• The LLC is six months late in filing its biennial report or paying a fee.
• The LLC has gone 30 days without an appointed and maintained registered agent.
• The LLC has misrepresented material facts in one of its state documents.

In Alaska, the commissioner must give the LLC written notice of the delinquency and allow the company 60 days to contest.

Judicial dissolution

Judicial dissolution, sometimes known as the corporate death penalty, is a legal process whereby a court orders dissolution.

Reasons can include:

• Mismanagement, fraud, or breach of fiduciary duty by an LLC manager or member.
• Internal disagreements between members.
• A member’s inability to fulfill responsibilities due to death or incapacitation.

Judicial dissolution is often initiated upon the petition of one or more members.

Voluntary dissolution

Voluntary dissolution is when an LLC`s members make a decision to shut down the LLC. This can happen in two ways:

• LLC operating agreements often specify trigger events that will require dissolution. An example might be the death of a member. If one of these events takes place, the members are required to dissolve the LLC.
• Members can vote to dissolve the LLC because of internal disputes or financial difficulties or because they simply don’t want to own the LLC any longer.

Dissolving Your LLC in Alaska

These are the steps required to voluntarily dissolve your Alaska LLC:

Step 1: Vote to dissolve the LLC

The first step, and, for many LLC owners, the biggest one, is actually making the decision to dissolve. If there has been a dissolution trigger event, as defined by the operating agreement, the decision is made for them, and the LLC must dissolve.

If the members choose to dissolve, there must be a vote. Depending on the operating agreement, dissolution may require a unanimous vote or only a majority.

Single vs multi-member LLC dissolution

In a single-member LLC, the member may choose to dissolve the LLC for any reason without anyone else’s permission. In a multi-member company, the members must take a vote. Depending on the operating agreement, a majority vote may be sufficient, or a unanimous vote may be required. Once they have voted to dissolve, the members should record their decision in writing.

Dissolution rules in your LLC operating agreement

The operating agreement should dictate how dissolution takes place, so members need to read and understand it before they proceed. The rules might include:

• The number or percentage of members needed for a vote to dissolve.
• What events will trigger an automatic dissolution.
• The specific steps that will take place in a dissolution.
• How debts will be resolved, assets sold, and proceeds distributed.

Step 2: Wind up all business affairs and handle any other business matters

As part of dissolution, an LLC will stop providing goods and/or services. There are several other actions you must take to wind up business activities in an orderly fashion:

1. Inform suppliers and customers that your business is closing.
2. Cancel any Alaska recurring business licenses and permits. See the Division of Corporation, Business and Professional Licensing for information.
3. Handle employee matters, possibly including severance packages and letters of recommendation.
4. Plan to close the LLC business bank accounts.
5. Notify your registered agent and terminate their services.

Step 3: Notify creditors and claimants about your LLC’s dissolution, settle existing debts and distribute remaining assets

If your LLC is struggling financially and it owes people money, you may close it, but that doesn’t erase its debts. Before you can dissolve, you have to inform your creditors and give them an opportunity to collect what you owe them. Your company will have to pay off credit cards, bank loans, and outstanding invoices. You also will need to resolve any pending lawsuits before dissolution can become final.

Once you have settled all these obligations, you must sell any physical assets. You will then distribute the LLC’s remaining cash to the members in accordance with the terms specified in the operating agreement.

Step 4: Notify Tax Agencies and settle remaining taxes

Alaska does not require dissolving LLCs to obtain a tax clearance certificate. However, you cannot dissolve an Alaska LLC if you owe taxes. You must do final reporting and pay all amounts owed for sales tax and employee withholding tax.

It’s good practice to review all tax and employment reports and returns you have filed during your LLC’s existence. That will give you a list of the authorities to contact to make sure that all taxation and employment reporting is up to date.

Step 5: File certificate of dissolution with the Secretary of State

The definitive step in the dissolution process is to file the certificate of dissolution with the Alaska Secretary of State. You can fill out the Articles of Dissolution PDF, download the completed from, sign it, and mail it to the address listed on the form. You can also file online at the Corporations section of the Alaska Commerce website.

The fee is $25, payable by check, money order, or credit card..

1. You must enter the LLC name and the Alaska entity number. You must make several attestations:

• That the entity is good standing.
• That biennial reports have been filed and paid.
• That the date of organization and the date of any amendments are available in the entity’s corporate record.

  2. You must list a reason, a dissolution effective date, and any other information that you or your fellow members deem appropriate.

  3. The form must be signed by a member or manager of record or by an attorney-in-fact.

  4. Whoever fills out the form must enter their name, sign the form, and fill in the date and time.

  5. You must name a contact for questions or problems and give their contact information.

  6. You must provide a name and address for the return of your filed documents.

• There is a place to enter credit card info for those paying with a card.
• It will take 10 to 15 business days for the Division of Corporations to process your certificate.
• Once you file your certificate of dissolution, your LLC may not conduct any business other than windup tasks.

Conclusion

LLC dissolution in Alaska is similar to dissolution in other states. There are no special requirements to make Alaska dissolution more challenging. Once your certificate of dissolution is processed, and you’ve completed all the windup tasks, your LLC no longer exists as an active Alaska business entity.

Even if you dissolved your LLC for entirely positive reason, it can be somewhat sad to let go of something that was important to you. You might take a moment to stop and congratulate yourself on having taken a risk, started a business, and poured your best effort into it. The experience will be of great value to you in future when you decide to file an LLC in Alaska again.

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