Dissolving Your LLC in West Virginia

Dissolving your LLC in West Virginia and winding down a business you’ve put time, money, and effort into is never an easy decision. But sometimes, dissolving your limited liability company becomes the right choice.

Basics of LLC Dissolution

There are several scenarios where dissolving your LLC becomes the best path forward:

• Your business is losing money or can no longer operate profitably. Keeping it open will just lead to more losses.
• You want to retire and close your LLC rather than pass it along to someone else.
• You’re moving the business to another state (you can also convert or register in the new state instead of closing).
• You are simply ready to move on to other business ventures or career opportunities.

Taking the step to dissolve means you are ready to wind down your company’s operations in an organized manner. It requires officially terminating your business activities within West Virginia’s jurisdiction.

Types of LLC Dissolution

Not all dissolutions are the same. It’s important to understand the different types of LLC dissolution:

Administrative Dissolution

The state government can trigger an administrative dissolution if your LLC fails to follow important requirements.

The Secretary of State can administratively dissolve an LLC that is more than 60 days late paying fees, taxes or penalties, or filing its annual report. It can also do so if a required professional license is revoked, the LLC is in default with the Bureau of Employment Programs, or it filed a materially false record (W. Va. Code §31B-8-809). The state sends notice by certified mail, and you have 60 days to fix the problem. An administratively dissolved LLC can apply for reinstatement within two years.

Judicial Dissolution

A judge can order the judicial dissolution of an LLC under certain circumstances. A member or dissociated member can ask a court to dissolve the LLC. Grounds include the company’s economic purpose being frustrated, a member’s conduct making it impractical to continue, or managers or controlling members acting illegally, oppressively or fraudulently (W. Va. Code §31B-8-801).

Judicial dissolution is rare and usually happens when members are in major disagreement on continuing the LLC’s operations.

Voluntary Dissolution

This is when the LLC members choose to dissolve the company. One or more members can propose dissolution. Unless your operating agreement says otherwise, dissolving requires the consent of all members (W. Va. Code §31B-4-404).

Voluntary dissolution is the most common method and happens when owners decide closing the business is in their best interest. Members handle the process themselves.

Steps to Voluntarily Dissolve Your West Virginia LLC

To voluntarily dissolve your LLC in West Virginia, you’ll need to take the following steps:

Step 1: Hold a Formal Vote to Dissolve

The first official step is holding a vote amongst LLC members to approve dissolving the company.

• Single-member LLCs can decide on their own without a vote.
• Multi-member LLCs need the consent of all members, unless your operating agreement sets a different rule.

Review your West Virginia operating agreement to understand the required voting procedures and rules around member meetings. Have members cast votes according to those procedures. Record the outcome in your company records along with a dissolution date.

Step 2: Wind Down Your Business Operations

Before legally dissolving, you must wind down your company’s operations and financial affairs. This winding up process involves:

• Providing vendors, customers, and clients notice about closing your LLC. Fulfill any remaining contracts or obligations.
• Terminating leases on equipment, properties, and vehicles. Sell any business assets and inventory.
• Canceling permits, licenses, utility accounts, insurance policies, and subscriptions.
• Paying any outstanding taxes, bills, and debts owed.
• Distributing remaining assets and profits to members as outlined in your operating agreement.
• Handling payroll, pensions, and employee notifications if you have staff.
• Letting your agent for service of process know you’re closing.

Thoroughly winding up operations helps resolve any lingering issues so you can dissolve with no loose ends. This process can take several months. Once the LLC is dissolved, it can only carry on activities needed to wind up its business.

Step 3: Notify and Pay Creditors

An important part of dissolution is notifying creditors and claimants that your LLC is dissolving. This gives them a chance to make claims against the company for any unpaid debts.

You can send written notice to known creditors. The notice must give them at least 120 days to submit a claim; claims received late are barred (W. Va. Code §31B-8-807). You can also publish a notice once in a newspaper in the county of your principal office. Other claims are then barred unless filed within five years (§31B-8-808). Both steps are optional but limit future claims. Pay off any legitimate business-related debts before proceeding.

Step 4: File Final Tax Returns and Pay Taxes

Contact federal and West Virginia state tax agencies to inform them you are closing your LLC.

You will need to file final tax returns on behalf of your business. This includes income tax returns, employment taxes, sales taxes, and informational returns.

Close your State Tax Department account by filing Form BUS-FIN (Declaration of Final Business Activity) and surrendering your Business Registration Certificate. Also close any WorkForce West Virginia unemployment account. Trying to dissolve with unpaid taxes can lead to penalties and liens against LLC members.

Step 5: File Articles of Termination

File Articles of Termination with the Secretary of State after your LLC has dissolved and wound up (W. Va. Code §31B-8-805). They must state your LLC’s name, the date it dissolved, and that the business has been wound up and its existence ended.

There is a $25 filing fee when submitting your Articles of Termination to the state, payable to the West Virginia Secretary of State.

You can submit the articles in person, by mail, or online through the WV One Stop Business Portal. Dissolution filings can’t be expedited. Once processed and approved, the state will issue a certificate of termination making your LLC’s termination official.

After Dissolution is Final: Wrap Up Loose Ends

Once your termination is filed, there are a few last loose ends to wrap up:

• Notify your bank and close any remaining LLC business accounts. Transfer any remaining funds to members.
• Close your IRS business account by sending a letter with your LLC’s legal name, EIN, address and reason for closing (Form 966 is for corporations). Also close LLC credit cards and lines of credit.
• Review contracts signed by your LLC and assign or terminate accordingly. Follow up on any contingencies.
• Manage remaining ledgers, accounting statements, tax records, licenses and legal documents according to retention rules.
• Provide partners and members with a final accounting of the dissolution and distribution of assets/profits.
• Update personal resumes and online profiles removing references to the now-dissolved LLC.

Completing these administrative wrap-ups provides closure and minimizes the chance of any lingering legal or financial issues.

Conclusion

Bringing your West Virginia LLC to a legal close takes coordination. From holding member votes to settling accounts to filing Articles of Termination, each step is important to do correctly. Rushing through dissolution leaves you open to risks.

The good news is that walking through the process systematically lets you successfully wrap up your business. Seek help from legal and accounting professionals if you need guidance. They can ensure you complete all dissolution requirements and avoid personal liability.

With some patience and diligence, you can officially dissolve your West Virginia LLC and move on to your next ventures.

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