A business entity typically ends its existence by being “dissolved” after an event occurs that mandates dissolution, or when the purpose of forming the LLC has reached its end. A court can dissolve an LLC in Florida for failure to comply with state laws or failure to pay its taxes.
More common, however, is judicial dissolution as a result of a lawsuit brought by disgruntled LLC members who wish to unravel their business ties. An LLC in Florida is expected to file Articles of Dissolution. An LLP may file a Statement of Dissolution and a Limited Partnership or LLP shall file a Cancellation of Certificate of Limited Partnership.
Aside from the Articles of Dissolution being a legal requirement, there are many practical reasons why a business should ensure it is properly dissolved in the state of Florida. Note that until a business is officially dissolved, its owners or managers continue to bind the business by their actions.
Filing Articles of Dissolution in Florida constitutes a well-publicized notice of dissolution and thereby a limitation of authority. This will prevent third parties from enforcing new obligations against the business.
Owners might be inclined to, for example, forego filing an annual report and allow the Secretary of State to administratively dissolve the business, but doing so will cause the entity to go into “bad standing” with the state and serve as evidence that formalities were being ignored.
Ethical practice for owners seeking to end a business would be to file Articles of Dissolution, thereby eliminating a rationale for piercing the corporate veil and dumping business debts to owners personally. In addition, a reputable business concludes operations by formally dissolving.
In the State of Florida, it is important to note that once your dissolution is complete, any business entity in Florida can claim the business name if they would like to use it. This is just one of many reasons why you should dissolve your Florida limited liability company if you are certain that you are done conducting business in the state.
Detailed Steps on How to Dissolve an LLC in Florida
If you and other company members decide to dissolve your LLC, it is very important to address the necessary steps; otherwise, you could face administrative consequences and additional challenges associated with the dissolution of your Florida LLC.
Table of Contents
Step One: Activate The Dissolution Clause
The first step to dissolving a Florida LLC is to activate the dissolution clause. A majority of Florida LLCs function under an operating agreement, although it is not technically required. This document is an agreement between the owners or members of a Florida LLC regarding how they will run the business.
If present, the operating agreement will govern how and when dissolution should occur. For example, an operating agreement may say that dissolution occurs if one of the founding members dies. Regardless of what it says specifically, make sure you review your LLC’s operating agreement before proceeding with dissolving an LLC in Florida.
Please note that for LLCs without an operating agreement, the Florida Revised Limited Liability Company Act provides some default options. Generally, this Act permits dissolving an LLC in Florida:
Upon unanimous consent of the LLC’s members;
- If 90 days pass during which the LLC has no remaining member;
- A court enters a decree of judicial dissolution; or
- The Florida DOC files a statement of administrative dissolution, usually based on the company’s failure to provide annual reports or fees.
Please note that as soon as the appropriate condition triggers dissolution, the winding-up process for the Florida LLC will commence.
Step Two: Settle the LLC’S Debts and Other Obligations
The next step to follow after you must have triggered the dissolution clause is to settle the LLC’s debts and meet up with other financial commitments. This is because when you dissolve an LLC in Florida, it is likely that the LLC still has some unpaid debts and financial obligations that they have to meet.
Florida law requires LLCs to distribute their assets in a particular order while winding up. As a result, you must follow this order correctly to avoid potential legal liability. It is important to note that, the LLC must use its assets to discharge its obligations to creditors, including any remaining taxes owed.
A creditor can be anyone outside the company to whom a debt is owed or any member who made personal loans to the company. Please note that an essential part of how to dissolve an LLC in Florida is properly handling these claims. There are specific notice requirements for known and unknown claimants you must follow.
Step Three: Distribute the Remaining Assets to Members
After you must have paid off all debts, the next step is to distribute the remaining assets to the members of the company. That is if there are still assets left over after paying all creditors, distributing those assets to the LLC’s members is the next step in LLC dissolution.
Please note that Florida law requires LLCs to make these distributions in the following order:
- First, to interest holders with unreturned contributions; and
- To current and dissociated members in proportion to their contributions.
It is important to note that once the LLC members have received their distributions, it is almost time to file the Florida LLC articles of dissolution.
Step Four: Wrap Up Any Out-Of-State Business Registrations (If Necessary)
The next step to take when dissolving a Florida LLC is to wrap up any out-of-state business registrations. This is important because most businesses choose to operate in more than one state. To do so, however, a business must register in any foreign state in which it wants to conduct business.
If this is the case for your LLC, make sure to properly close out these foreign registrations during the Florida LLC dissolution process. Please note that each state handles foreign business entities differently, so make sure to check each relevant state’s laws for specifics.
Step Five: File the Articles of Dissolution
The last step to take when dissolving an LLC in Florida is to file the articles of dissolution with the Florida DOC. An article of dissolution is a document that is filed to effect and formalize the cessation of an incorporated organization. In other words, it is an official document filed before the dissolution of a partnership or corporation which mentions the provisions for the distribution of assets.
Interestingly, Florida offers online or paper filing with a fee of $25. There may be additional fees for certified documents. Please note that the Florida DOC strongly recommends hiring legal counsel before submitting any documents.
The Division’s website provides more information about how to close an LLC in Florida. Florida requires business owners to submit their Articles of Dissolution by mail or online.
OPTION 1: File by mail
OPTION 2: File online
Filing Fee: $25
Division of Corporations
P.O. Box 6327
Tallahassee, FL 32314.
Whether you are dissolving a domestic or foreign limited liability company, the process isn’t complicated. The filing of either the Certificate of Withdrawal of a Foreign Business Entity or an Application for Dissolution is essentially the same process.
The bottom line is that after a Florida LLC has been administratively dissolved, it can still be reinstated and regain its authority to conduct business in the state at any time after the date of dissolution. To reinstate a Florida LLC, you must file a Limited Liability Company Reinstatement with the Division of Corporations.