Dissolving an LLC in Louisiana: What You Need to Know

Even the most successful businesses sometimes reach a point where it’s time to close the chapter. Even if it’s enjoyed success, there may come a time when dissolving the company is the best path forward. Changing market conditions might make your Louisiana business less profitable than it once was, or perhaps you’ve achieved the goals you set out to accomplish and are ready for your next venture. Whatever the reason, knowing when it’s time to move on is key to future success.

Whatever your reason, there’s a dissolution process you must follow to protect your LLC and yourself personally. Below are some reasons for dissolving an LLC, different types of dissolution, and specific steps and requirements for doing so in Louisiana.

Basics of LLC dissolution

Dissolution is the process of shutting down an LLC in the state where it was organized and is registered. Once you dissolve your LLC, it is officially put to bed and no longer exists in the state.

LLC Dissolution

To properly dissolve your LLC, it isn’t enough to put a “closed” sign in your window and stop going to work. You must remove your LLC’s status as an active company by canceling it with the Louisiana Secretary of State.

You need to make sure the Secretary of State accepts your dissolution application. To do that, there are specific steps you need to follow, including notifying your creditors, resolving existing debts, and settling tax and employment issues with the appropriate government agencies. This is required to protect you and your LLC from future liabilities.

Types of LLC dissolution

LLC dissolution can be voluntary or involuntary. Involuntary dissolution may be either administrative or judicial.

Administrative dissolution

In Louisiana, the Secretary of State can revoke an LLC’s articles of organization if it fails to file its annual report for three consecutive years, after 30 days’ written notice. Revocation strips the LLC of its rights, powers, and authority. A revoked LLC can be reinstated within three years (R.S. 12:1308.2).

Judicial dissolution

Judicial dissolution is an act of the court. A court can dissolve an LLC when a member applies and it is not reasonably practicable to carry on the business under the articles of organization or operating agreement (R.S. 12:1335).

Voluntary Dissolution

Voluntary dissolution happens when you, or you and your fellow members, choose to end the business. Sometimes this is triggered by an event named in the operating agreement, such as the death or disability of a member. Other times it may be due to internal disputes or financial difficulties.

If there is more than one member, voluntary dissolution requires a vote. Unless the articles or a written operating agreement say otherwise, a majority vote of the members approves dissolution (R.S. 12:1318).

Dissolving your LLC in Louisiana

Here are the steps required for a voluntary dissolution for your Louisiana LLC.

Step 1: Vote to dissolve the LLC

If there is more than one LLC member, a vote will be necessary. The operating agreement should spell out the details about how the decision to dissolve will come about. The agreement may list triggers, such as the death of a member, that will require dissolution. For a dissolution that happens due to a vote of the members, the agreement may detail how that vote will take place. If the operating agreement is silent on dissolution, Louisiana law applies, and a majority vote of the members approves dissolution (R.S. 12:1318).

Single vs multi member LLC dissolution

If you are the only member of your Louisiana LLC, it’s up to you to make the decision on whether to dissolve. If you have fellow members, the decision will necessitate a vote. A majority vote is the default unless your articles or operating agreement require more. Keep in mind that filing the short form Affidavit to Dissolve requires all members to sign or authorize it (for online filings, geauxBIZ emails each member to approve).

Dissolution rules in your LLC operating agreement

Any LLC that wants to dissolve must consult your Louisiana LLC operating agreement to see what its dissolution rules are. These can include:

• What events will trigger an automatic dissolution.
• How many members need to vote in favor of dissolution.
• The procedures for shutting down the company’s activities.
• How the members will divide any remaining assets.

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

A dissolving LLC must wind up its activities in an orderly fashion. Here are a few of the steps you may have to take:

• Notifying your registered agent and canceling the service.
• Informing suppliers and customers that you will no longer be doing business.
• Canceling any Louisiana recurring business licenses and permits.
• Preparing employees, and possibly offering severance pay and letters of recommendation.
• Stopping planned sales or services.
• Preparing to close business bank accounts.
• Selling business assets such as machinery.

Step 3: Notify creditors and claimants and settle existing debts

You may choose to close your LLC if it is running into financial difficulties. However, dissolution doesn’t cancel any debts your LLC has incurred or resolve any lawsuits it may be involved in. You must inform all of your creditors of your pending dissolution so that they have the opportunity to collect what they’re owed.

Once all debts have been settled, you then must sell any remaining assets and distribute leftover funds to the LLC members in the manner specified by the operating agreement.

Step 4: Notify tax agencies and settle remaining taxes

Louisiana generally doesn’t require a tax clearance certificate to dissolve a domestic LLC, but you should file final state tax and payroll returns with the Louisiana Department of Revenue and the Louisiana Workforce Commission.

You will have to complete all required Louisiana state tax and employee reporting. You must also follow the process specified by the IRS for reporting a business closure.

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

In Louisiana, the required dissolution form is called the Affidavit to Dissolve Limited Liability Company. There is a long form and a short form. The short form affidavit can be used only if the LLC is no longer doing business, owes no debts and owns no immovable property (R.S. 12:1335.1). Once it is filed, the members become personally liable for any remaining debts or claims against the LLC, in proportion to their ownership, and the LLC can only be reinstated by court order. The long form is complex, and the State of Louisiana recommends that those who need to use it consult an attorney. This route involves notifying creditors and publishing a notice, and it can bar later claims.

The short form is available as a PDF that you can download and mail or fax to the Secretary of State. It requires that you fill in the LLC name, the name and contact information for the person filling out the form, the parish, and the names of all members or organizers. It requires the signature of a notary public. It must be accompanied by a filing fee of $125.

Once your affidavit is accepted, you will receive a Certificate of Dissolution. There is expedited processing available, $35 for a 24-hour turnaround or $60 for priority processing as you wait.

The form may also be filed online at geauxBIZ, the all-purpose Louisiana business website. You will have to create an account to access the form, and geauxBIZ emails each member to authorize the filing. The Secretary of State’s forms and fee schedule page lists the current form and fees.

Once you have filed, your LLC exists only for the purpose of resolving a few remaining issues such as closing bank accounts and distributing assets to the members. Your LLC may no longer transact business.

Conclusion

Once your Affidavit to Dissolve has been accepted and you have received your Certificate of Dissolution, your LLC no longer exists. There is a lot of work from the time you make the decision to dissolve until dissolution is completed, and many people will want to take a minute to look back on the LLC they built, managed, and eventually closed.

Congratulations on taking a risk, pouring your heart into a business, and on the learning and growth that you experienced! But now is the time to move forward and look for your next project. Tailor Brands is here to help you with our extensive LLC services. Whether you need to dissolve your LLC, decide to get an LLC in Louisiana again, or are interested in other business services, we have you covered.

FAQ