If you have a limited liability company (LLC) in Colorado, you may need to shut down the business at some point. Maybe you’ve started another company or decided to relocate to another state— whatever the reason, you’ll need to follow the somewhat complicated LLC dissolution process.
If done incorrectly, you’ll still be responsible for annual reports and fees and could face additional penalties. But, lucky for you, this handy guide explains how to dissolve an LLC in Colorado.
Properly shutting down an LLC involves several crucial steps, as detailed below.
1. Vote for Dissolution
LLC owners, known as members, must vote to dissolve the LLC. Hopefully, you have an operating agreement that details the process. If not, Colorado law requires you to gain consensus of all members. Once you do so, you’ll need to draft a resolution to dissolve the LLC.
2. Cancel Business Licenses and Permits
If you were required to get licenses and permits for your business, you’d need to contact the issuing agencies to cancel them so that you’re not charged renewal fees. If you have any outstanding fees, you’ll likely need to pay them before you are allowed to cancel.
3. Notify Creditors
If you owe money to any creditors, you should notify them in writing of the dissolution and give them detailed instructions on filing any claims for the outstanding debt. In Colorado, claims must be filed within two years of receiving the notice.
You can only notify creditors in Colorado after your LLC is already dissolved.
4. Notify Tax Departments
Notify any relevant tax authorities of the dissolution and pay any outstanding taxes due.
5. Cancel Contracts and Settle Financial Obligations
If you have contracts with vendors, lessors, or any other outstanding financial obligations, you’ll need to ensure all your obligations are fulfilled and all contracts are canceled.
6. Distribute Assets to Members
If the LLC has any assets remaining in any form after all financial obligations have been settled, they must be distributed to members based on LLC ownership percentages. If the assets are equipment, property, or other non-cash assets, they’ll need to be sold first so distributions can be made in cash.
7. File the Dissolution Papers with Colorado
In Colorado, you can only file your Statement of Dissolution online. To start, go to the Secretary of State’s Business Search site, and find your LLC by name.
Select your LLC, and confirm that you can change this business. Then, on this next page, select that you’re filing to “Dissolve a Limited Liability Company.”
Fill out your information on this page.
Hit “Submit” at the bottom, and go through the review and payment processes. When you see a Confirmation page, your filing has been completed.
The filing fee is $10. Because you can only file online, you can only pay by credit card, debit card, or prepaid account with the Secretary of State.
Regardless of the reason, LLC dissolution must be done right to avoid legal issues and financial penalties. Therefore, it’s highly recommended that you employ the services of an attorney to ensure everything is done correctly and all bases are covered.
How much does it cost to dissolve an LLC in Colorado?
It costs $10 to file your Statement of Dissolution in Colorado.
How long does it take to dissolve a Colorado LLC?
Documents submitted online are filed in real-time. Therefore, your dissolution takes effect immediately after your payment is confirmed unless you specify a later dissolution date.
Should I close an unused LLC in Colorado?
If you’re not using your Colorado LLC, you should close it to avoid any fees, filings, and responsibilities that your LLC might create.
What happens if I don't dissolve my LLC in Colorado?
If you don’t dissolve your LLC, you’ll still be accountable for fees, filings, and responsibilities, such as your annual Periodic Report.
What is the difference between the dissolution and termination of an LLC in Colorado?
Filing your Statement of Dissolution simply tells Colorado that you’re shutting down your LLC. You can still operate on a limited scale to wind up operations, liquidize assets, and settle claims. However, your LLC is officially terminated once you’re done with housekeeping, your LLC is formally terminated.