Closing Down: How to Dissolve an LLC in North Carolina

Whether it’s a change of heart or challenging business circumstances that have led you to figure out how to dissolve an LLC in North Carolina, you’ve come to the right place.

We’ll dive into the details of everything that you need to do to properly dissolve your North Carolina LLC, ensuring compliance with all the regulations. It’s not a very complicated process or one that takes a lot of time.

However, it does require diligence on your part, since the process must be done very carefully to ensure that you don’t run into any problems down the line.

Once you get the hang of it, you’ll be able to proceed on your own without much problem. With that being said, there’s also a case to be made to seek professional help like doola for the dissolution process, for reasons we’ll get into later on.

Understanding LLC Dissolution in North Carolina

If you have a limited liability company that you’d like to terminate, dissolution is the first step to making that happen. It’s basically what the process of winding up the company is called.

The LLC ceases to conduct the business that it was set up for and if needed, liquidates any assets and settles outstanding liabilities. There’s typically a triggering event involved in the dissolution of an LLC.

For example, if an LLC was set up to achieve a specific investment goal that has now been met, it can then be dissolved since its original purpose has been achieved. The events that would trigger a dissolution are generally described in the operating agreement of the LLC.

The LLC dissolution procedure is simpler in North Carolina compared to some other states. It only imposes certain filing requirements as opposed to other states that also require tax clearance certificates. North Carolina doesn’t impose that requirement on LLCs in the state.

Why Dissolve an LLC in North Carolina?

There could be any number of reasons why you’d want to dissolve a North Carolina LLC. If the business faces challenges that it’s unable to overcome, there’s no point in running it at a loss. In that case, you’d shut down the business and dissolve the LLC that was set up to manage it. 

Perhaps you’ve decided to try another business idea and want to shut down your current business. This would also require the LLC to be dissolved since it would be proper to start the new business under a different LLC.

Another reason might be that you’re going to take up a full-time job elsewhere and need to shut down the business simply because you won’t have the time to run it.

Whatever your reasons may be, what matters is how you go about the process of dissolving your business entity. Be diligent and thorough so that it’s done right the first time around and you don’t face any problems in the future.

How to Dissolve an LLC in North Carolina in 7 Steps

There are a few important steps that need to be followed for the dissolution process to be completed properly. Each step is highlighted in detail below so you’ll know exactly what needs to be done for the dissolution of your North Carolina LLC.

By being diligent and thorough every step of the way you can ensure that it’s all done correctly and that there’s no need to revisit any step down the line.

1. Review Your LLC’s Operating Agreement

The operating agreement of your limited liability company provides a framework for how things will be done and this will include dissolution of the LLC as well. The aforementioned triggering event will be highlighted in the operating agreement.

For example, if it mentions that once the LLC has met its investment objectives it will be wound up, then that would be the triggering event for the dissolution process to begin.

Therefore, review the operating agreement very closely to understand under what circumstances the LLC can be dissolved and what procedure needs to be followed.

It may require you to provide notices to members a certain number of days or weeks ahead of time. It may also require that all members must unanimously vote for the dissolution to proceed.

2. Vote to Dissolve an LLC

North Carolina requires that all members of the LLC must unanimously approve the dissolution. You will be unable to dissolve the LLC legally in the state without the written consent of every member. Therefore, if your LLC has multiple members, you’ll need to call a meeting for them to vote on this.

Make sure you’re giving the members enough notice so that they’re able to participate in the meeting. The proposal to dissolve the LLC should be discussed in the meeting before a formal vote is called. If unanimous, the subsequent filing requirements can be met. 

In order to dissolve the LLC, you’ll need to file form L-07, Articles of Dissolution of Limited Liability Company with the North Carolina Secretary of State.

3. File Articles of Dissolution

Voluntarily file the Articles of Dissolution with the state to wind up your business entity. Once the filing has been made, the only activities your LLC can do will be related to the winding up process, such as disposing of assets and settling any liabilities. 

You’ll need to provide some information about the LLC in the form that you submit. This will include the complete name of the limited liability company being dissolved, the effective date of the dissolution, and any other relevant information that the members may elect to provide.

The form can be submitted to the Secretary of State online, in person, or by mail. There’s a $30 filing fee that can be paid online or through checks, money orders, or even cash, depending upon your filing method.

4. Notify Tax Agencies and Pay the Remaining Taxes

Unlike other states that require you to do this, North Carolina doesn’t require LLCs to obtain a tax clearance certificate from the Department of Revenue.

This means that the dissolution procedure happens much more quickly since you don’t need to wait for the clearance certificate to arrive.

However, it would be a good idea to disclose to the IRS that you’re winding up this LLC. You can file Form 966 with the IRS once the LLC has been dissolved to notify the tax agency that the LLC has been wound up.

5. Inform Creditors and Settle Existing Debt

Any creditors that the LLC has should be informed that it’s being dissolved and their dues settled. It’s important to sort out any claims that they have before the LLC is dissolved so that you don’t run into any problems later on.

Dissolving the LLC without informing creditors will lead to claims from them alleging that you intentionally dissolved the business to avoid paying the debts.

Settle any existing debts owed to creditors, including LLC members who may also be creditors. Members who made contributions to the LLC that haven’t already been returned must also be made whole. Payments must be made to members in accordance with their shares highlighted in the operating agreement.

Taking care of these matters at this stage will ensure that there are no problems in the future, particularly related to outstanding debts, as creditors won’t be able to claim that the business was dissolved secretly to avoid the debts.

6. Wind Up Other Business Affairs

There will likely be many other loose ends that you need to tie up as you go through the process of dissolving your North Carolina LLC.

For example, if you work with suppliers, you should let them know that the business is winding up so that they can sort things out on their end. 

You may also have customers that rely on your products and services. It’s imperative that they have ample time to find replacements and if they have money stuck with you, they can explore their options to get refunds. Provide them with enough time to consider their options by giving them adequate notice of the impending dissolution.

Any business licenses or permits that were obtained should be canceled, particularly if your business had a license to operate in other states.

If you have employees, give them enough time to find other suitable jobs. It wouldn’t be right if they find out without any warning that the company they work for is shutting down. Settle any outstanding wages before closing the company’s bank accounts.

7. Distribute Remaining Assets

After all the debts have been settled, the employees have been paid, and all other liabilities discharged, it’s now time to distribute any assets and profits that may be left among the members of the LLC. The operating agreement will mention the percentages that each member is eligible to receive.

Do go through the operating agreement for any other terms associated with these distributions. For example, it may mention that the distributions will only be made once all legal and filing expenses for the dissolution have been deducted from the company’s accounts.

How Much Does It Cost to Dissolve an LLC in North Carolina?

There’s a $30 filing fee to dissolve your North Carolina LLC. This fee is for the standard service whereby the application is processed within 3-5 business days.

You can also opt for same-day expedited service as well which is going to cost $200 or opt for the 24-hour expedited service for an extra charge of $100.

Should I Dissolve My LLC Myself or Hire an LLC Dissolution Service in North Carolina?

Now that you’ve understood how to dissolve an LLC in North Carolina, you could do the entire dissolution process yourself.

But did you know that the vast majority of business owners prefer to seek professional help? 

That’s because it can be particularly challenging if your LLC has many members, different creditors, a lot of customers, suppliers, out-of-state business licenses, and more. Working with professionals ensures that nothing is missed and that all the filing requirements are met so that there are no problems down the line.

How doola Can Simplify Your North Carolina LLC Dissolution

doola provides you with complete professional assistance from start to finish, making sure that all legal and regulatory requirements are met so that your LLC is properly dissolved.

Our process starts by collecting basic information about your LLC and making the required filings. We’ll reach out if any further information or documentation is required. 

Once our dissolution professionals are informed by the state that the entity has been dissolved, you’ll be notified instantly.

Schedule a free consultation with one of our experts to know more.

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