How to Dissolve an LLC in Washington State

Basics of LLC Dissolution

Dissolving an LLC means that you are formally ending the company’s existence in the eyes of the state. This means that you and the company will no longer be required to meet obligations such as filing annual reports. You’ll still need to file final tax returns.

Types of LLC Dissolution

In Washington, there are three different types of LLC dissolution. Here is a breakdown of these three types and the circumstances that apply to each one:

Administrative Dissolution

Administrative dissolution is a type of LLC dissolution that is ordered and initiated by the state. The Secretary of State can administratively dissolve an LLC that doesn’t pay its fees, doesn’t file its annual report within 120 days after it’s due, or goes without a registered agent (RCW 23.95.605). The state sends a notice first, and the LLC has 60 days to fix the problem (RCW 23.95.610). An administratively dissolved LLC can apply for reinstatement within five years (RCW 23.95.615).

Judicial Dissolution

A member or manager can ask a court to dissolve the LLC. The court may do so if it isn’t reasonably practicable to carry on the LLC’s activities under its certificate of formation and LLC agreement, or if other circumstances make dissolution equitable (RCW 25.15.274).

Voluntary Dissolution

The most common type of LLC dissolution is voluntary dissolution, and this occurs when the members of an LLC voluntarily decide to dissolve the company. This type of dissolution requires LLC members to complete a specific process, and it’s the type that we will focus on for the remainder of this guide.

Dissolving Your LLC in Washington

If you and the other members of your Washington LLC decide to voluntarily dissolve the company, it’s essential to follow the right steps. Here is the step-by-step process you can follow to dissolve your company and avoid any complications:

Step 1: Vote to Dissolve the LLC

Before an LLC can be dissolved, its members must approve the dissolution. For single-member LLCs, this decision lies with just one person. Unless your LLC agreement says otherwise, Washington law requires the written consent of all members to dissolve (RCW 25.15.265(3)). Your agreement can also set other events that trigger dissolution.

Single vs multi member LLC dissolution

Owners of a single-member LLC can decide all on their own whether they want to dissolve the company. For multi-member LLCs, the procedure for approving dissolution is typically outlined in the company’s operating agreement. This includes details such as how the decision is made and what approval is required to proceed with dissolving the company.

Dissolution rules in your LLC operating agreement

Most LLC operating agreements will include specific details on how the dissolution process is to be conducted. This includes specifics on voting for dissolution, but it also includes considerations like how the company is to distribute its remaining assets, cancel contracts, and notify creditors. Before you move forward with dissolving the company, be sure to carefully review your Washington LLC operating agreement and follow all of the requirements it outlines.

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

Once you and the rest of the LLC’s members have made the decision to dissolve the company, the next step is to wind up any remaining business affairs. This includes things like:

• Notifying your registered agent, suppliers, customers, and any other stakeholders
• Canceling all of your business licenses or permits
• Handling any employee matters, such as final paychecks and unemployment insurance
• Closing business bank accounts and making sure that you’ve met all financial obligations

Step 3: Settle debts and distribute remaining assets

In Washington, the LLC winds up its affairs after it dissolves: it pays or makes provision for its debts and then distributes what’s left (RCW 25.15.297 and 25.15.305). Sending written notice to known creditors is optional, but if you use this procedure, the notice must give them at least 120 days to submit a claim (RCW 25.15.301).

Once all outstanding debts are paid, you will need to distribute any company assets that remain. As we previously discussed, your company’s operating agreement should detail how assets are to be distributed among members.

Step 4: Notify Tax Agencies and settle remaining taxes

You’ll also need to file final state and federal tax returns for your Washington LLC. Close your Department of Revenue tax account and file your final excise tax return by the 25th of the following month. LLCs don’t need the Revenue Clearance Certificate that corporations must get.

While Washington does not have a state income tax, your LLC may still owe other types of state taxes, such as business and occupation (B&O) tax, sales tax, or use tax. Confirm that all state taxes have been paid by checking with the Washington State Department of Revenue.

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

To formally dissolve your LLC, file a Certificate of Dissolution with the Washington Secretary of State. This form is available on the Secretary of State’s website, and it looks like this:

Carefully review the Certificate of Dissolution form and fill in all required information to ensure there are no mistakes that could delay the process. You can file the Certificate of Dissolution either online or by mail.

To file online:

1. Visit the Washington Secretary of State’s website and access the Corporations and Charities Filing System (CCFS).
2. Log in or create an account, then select Business Maintenance Filings, then Dissolution/Withdrawal.
3. Search for your LLC by its name or UBI number.
4. Once you find your LLC, select the option to file the “Certificate of Dissolution” and complete the form.
5. There’s no filing fee, but online filings include the Secretary of State’s online processing fee. Expedited processing costs $100 more.

To file by mail:

1. Complete the Certificate of Dissolution form. There’s no filing fee unless you request expedited service ($100).
2. Mail the completed form to:

Secretary of State

Corporations and Charities Division

PO Box 40234

Olympia, WA 98504-0234

You will receive a confirmation once your filing has been processed. Keep in mind that mailed filings may take longer to process compared to online submissions.

The dissolution takes effect on the filing date or a later date up to 90 days out. You can revoke it within 120 days of filing (RCW 25.15.294); after that, the LLC is permanently dissolved.

Conclusion

If you and the rest of your LLC’s members have decided that it’s best to no longer continue operating the company, legally dissolving it is an essential final step. By following the steps covered in this guide, you can dissolve your Washington LLC so that it ceases to exist as far as the state is concerned, freeing you up to put the company behind you and move on to your next venture.

Keep in mind that every business outcome is a learning opportunity. Dissolving your LLC may mark the end of one era, but it can also mark the beginning of something new, more successful and involve LLC creation instead of dissolution!

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