If you have a limited liability company (LLC) in Massachusetts, you may need to shut down the business at some point. On the other hand, 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 penalties down the line. But, lucky for you, this handy guide explains how to dissolve an LLC in Massachusetts.
The Process to Dissolve Your Massachusetts LLC
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, Massachusetts law requires that you gain the written consent 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’ll need to notify them in writing of the dissolution and give them detailed instructions on filing any claims for the outstanding debt. In Massachusetts, you must pay or make provisions to pay for all known claims and obligations before officially filing to dissolve.
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 Massachusetts
The last step to dissolving your LLC is to file your Certificate of Cancellation with the Massachusetts Secretary of the Commonwealth.
You can only do so online using Massachusetts’ Corporations Online Filing System.
Log in with your business’s Customer ID Number and PIN. If you don’t have these, contact the Corporations Division at [email protected].
Fill in the following information:
- Your federal employer ID number
- The name of your LLC
- The date you filed your original certificate of organization
- The date you’d like your cancellation to take effect
- Any other relevant information
Once you submit your filing, proceed to the payment process.
The fee for filing your Certificate of Cancellation is $100, and you can pay an additional $10 for expedited processing. You can pay by credit card, e-check, or EFT.
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 Massachusetts?
It costs $100 to file your Certificate of Cancellation in Massachusetts.
How long does it take to dissolve a Massachusetts LLC?
Once you file your Certificate of Cancellation, it will take up to five days to process. However, for an additional $10, you can request expedited processing.
Should I close an unused LLC in Massachusetts?
If you’re not using your Massachusetts LLC, you should close it to avoid unnecessary fees, filings, claims, and responsibilities your LLC may incur.
What happens if I don't dissolve my LLC in Massachusetts?
If you don’t dissolve your Massachusetts LLC, you’ll still be accountable for fees, filings, claims, and responsibilities like your annual report. If you don’t file your annual report or pay due fees, your LLC will be administratively dissolved.
What is the difference between the dissolution and termination of an LLC in Massachusetts?
Dissolution is the decision between members to close your Massachusetts LLC. Once you’ve decided to dissolve, your LLC can still operate in a limited capacity to wind up the business, liquidize and distribute assets, and close claims. Once all your affairs have been settled, file the Certificate of Cancellation with the Secretary of the Commonwealth to officially terminate your LLC.