Dissolving an LLC in Nebraska​

Making the decision to dissolve your Nebraska LLC means you need to follow a series of steps for its proper closure. Just as there are legal steps to form a Nebraska LLC, there are also specific processes you must follow to officially close it. These steps must be done properly and in accordance with the state laws that govern the legal dissolution of an LLC.

In this post, we’ll take a look at what you need to know about dissolving your Nebraska LLC for good, the reasons why you have to do it, and how to go about the act in Nebraska.

Basics of LLC Dissolution

The act of dissolving your Nebraska LLC results in permanently closing your LLC, and rendering it unable to conduct business going forward. It eliminates the LLC’s status as an independent legal entity, which means you can no longer use it to protect yourself from business liabilities.

In order to successfully dissolve your LLC, you have to follow the state statutes that cover the dissolution of an LLC, take the appropriate actions, and file a Statement of Dissolution with the Nebraska Secretary of State.

After you file the Statement of Dissolution, the LLC enters the winding up period. During winding up, the LLC is responsible for settling debts, paying taxes, and distributing the remaining assets to the members according to the operating agreement. When winding up is finished, you can file an optional Statement of Termination ($30).

There are three different ways to dissolve an LLC. They include administrative, judicial, and voluntary. The type of dissolution that applies to your LLC depends on the circumstances that are leading to the dissolution.

Types of LLC Dissolution

Administrative Dissolution

An administrative dissolution is one that’s done by the state of Nebraska, and it happens when the operators of an LLC fail to submit the required filings. The Secretary of State can dissolve an LLC that is more than 60 days late filing its biennial report or paying fees owed to the Secretary of State.

The Secretary of State first serves a notice, and the LLC has 60 days to fix the problem before it’s dissolved (Neb. Rev. Stat. 21-151). An LLC can apply for reinstatement within 5 years ($30), or later through late reinstatement ($500).

Judicial Dissolution

A member can ask a district court to dissolve the LLC if its activities are unlawful, if it’s not reasonably practicable to carry on the business, or if those in control have acted illegally, fraudulently or oppressively (Neb. Rev. Stat. 21-147). The court looks at the situation that’s being presented, hears arguments, then makes a decision to dissolve the LLC based on the evidence that’s presented.

Voluntary Dissolution

A voluntary dissolution is one where the members agree to dissolve the LLC and begin the process of winding down the operation. The reason for dissolution can be anything. Unless your operating agreement says otherwise, dissolving requires the consent of all members.

Dissolving Your LLC in Nebraska

Here are the steps that you need to follow if you’re choosing to engage in a voluntary dissolution for your LLC.

Step 1: Vote to Dissolve the LLC

The members of the LLC have to vote to dissolve the LLC in order for it to be legal and binding. All members must agree unless your operating agreement sets a different vote.

An operating agreement can also contain a trigger for dissolution in the event one of the LLC members passes away. This event is considered a voluntary dissolution as it was agreed upon during the drafting of the operating agreement.

Single vs multi member LLC dissolution

Dissolving a single member LLC is slightly different from dissolving a multi-member LLC. The single member is the sole vote in the LLC and is fully responsible for the administrative work that follows. In contrast, the multi-member has to call a vote, get agreement, then divide the administrative tasks among the members.

Dissolution rules in your LLC operating agreement

When you formed your LLC, you may have also created a Nebraska operating agreement. The operating agreement contains different clauses that guide how the business is run, and it also contains a dissolution clause.

The dissolution clause lays out the reasons for a dissolution (for example, the death of a member or a lack of funds), and how to go through the process. Some of the items in the clause can include items such as:

• How to distribute the assets among the members.
• Who handles certain duties.
• Informing creditors, banks, and employees of the closing of the business.
• How debts are paid and discharged.

Nebraska-Specific Rules for Voting to Dissolve Your LLC

In the event there are no members in the LLC, a legal representative of the last member can wind down the LLC and file for dissolution. The legal representative has the powers of a sole manager and is free to make decisions of their own accord. An LLC that has no members for 90 consecutive days is dissolved.

Step 2: Wind Up All Business Affairs and Handle Any Other Business Matters

After the vote has been made in favor of dissolution, it’s time to wind down the operations of the LLC. During this period of time, notifications need to go out to anyone who has an interest in the LLC. That includes:

• Notifying your registered agent.
• Informing employees.
• Contacting suppliers and canceling contracts.
• Letting customers know about the impending closure.
• Canceling all Nebraska licenses and permits that are related to the LLC.
• Closing the bank account once all debts are settled.

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

The purpose of an LLC is to protect its members against liabilities such as debt, but the debts can survive the dissolution of an LLC if they’re not resolved. During the wind down period, you have to give your creditors the opportunity to make a claim against the LLC for payment. This is done by:

• Notifying creditors of the dissolution and claim period by letter.
• Describe the information that is necessary to make a claim.
• Have a physical mailing address for receiving claims.
• State a deadline that’s at least 120 days after the claimant receives the notice (Neb. Rev. Stat. 21-149).
• State that claims will be barred if they’re not received before the deadline.

To cut off unknown claims, you can also publish a notice once a week for 3 weeks in a legal newspaper. Those claims are then barred unless an action is brought within 5 years (Neb. Rev. Stat. 21-150).

It’s worth noting that a claim may still be enforceable if the notice didn’t meet the legal requirements. A properly notified creditor who misses the deadline is barred.

Once all claims and debts have been resolved, the remaining assets can be distributed to the members according to the operating agreement.

Step 4: Notify Tax Agencies and settle remaining taxes

The IRS has to be notified that the LLC is being dissolved, and any final tax payments have to be remitted. The Nebraska Department of Revenue requires all outstanding tax returns to be filed within 20 days of the date the business is officially closed. The Statement of Dissolution doesn’t ask for a tax clearance, but you still need to file final federal and Nebraska returns.

Step 5: File a Statement of Dissolution with the Secretary of State

Nebraska law requires the LLC to deliver a Statement of Dissolution as part of winding up, so you can file it as soon as the members have voted to dissolve. The Statement of Dissolution is a one-page form that costs $25 online or $30 on paper. The form asks for:

• The name of the LLC
• An effective date (only if it’s different from the filing date)
• The date that the statement was filled out.
• The signature and printed name of an authorized representative.

The form can be mailed to:

Nebraska Secretary of State, Business Services Division

P.O. Box 94608

Lincoln, NE 68509

You can also deliver it to the Secretary of State’s office in Lincoln, or you can file it online through the Secretary of State’s eDelivery system.

Conclusion

Dissolving an LLC for any reason can make you feel like you’ve failed, even when circumstances were beyond your control. Instead of looking at the dissolution as something negative, consider it as part of your business education and use your experience to build your next LLC.

The end of your LLC should be viewed as a fresh start for your next venture. Consider what went wrong with your business that led to its closure, and use that as a road map for what not to do. You’ll be more informed, and you possess experience that makes it easier to file an LLC when you are ready.

Be aware that the dissolution of your Nebraska LLC needs to be final and completed before you decide to file for your next LLC. This ensures that you won’t have to deal with issues that weren’t fully closed out by the time the dissolution finished, allowing you to focus on creating a bigger and better business venture.

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