Closing a business deal for Procurement

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you made the decision to dissolve your LLC and I am sure you did not make that decision lightly in this video I want to give you a step-by-step guide on what you need to do to properly dissolve your LLC before we jump in don't forget to like comment and subscribe and when you stay to the end I am also going to give you a strategy on what you need to do to ensure that when you dissolve your LLC no one is generating credit or bills in your name that you're gonna have to pay for foreign let's get after it generally when people have decided to dissolve their LLC many times people just walk away from their entities not realize that this entity has a life of its own dissolving an LLC is extremely important and the steps that you need to take are equally as important to make sure that you wind down the Affairs of that LLC and that you're never left liable for what happens after the date that you decided to dissolve your LLC when you are dissolving your loc that means you're no longer going to be responsible for the annual fees that means you're no longer going to need to file a tax return that means that you are literally going to go out to your secretary of state and notify them that you are no longer going to be operating that LLC first vote to dissolve your LLC that means that you have to get all your members together and they have to make a unanimous vote to dissolve your LLC especially when you're in a multi-member LLC if you are in a single member LLC it's just you making that decision that you're going to dissolve your LLC but you want to document that decision on paper that is extremely important that that happens once you make that vote to dissolve that LLC the next thing you're going to do file the proper paperwork filing the proper paperwork means that you're going to go to the Secretary of State of your state and you're going to file a dissolution document which tells the state that you want to dissolve your loc and when you file that dissolution you want to make sure that that dissolution gets stamped by the Secretary of State the date of the stamp on your dissolution paperwork is critical it is literally like the date of death I hate to say that but just keeping it a hundred you need to make sure that you have that document and you want to make sure that the Secretary of State sends you official copy of the dissolution that is stamped and you want to keep that in your records just like you kept your original articles of organization from time to time you will need to present that dissolution to let people know you are no longer doing business when you file that dissolution you also want to make sure that it includes the name the address of all the various members everything about the business is being dissolved and that's very important because people can look that up on the Secretary of State website and literally see the date you form the business and the date that you dissolve the business so you want to make sure that information is all inclusive and that's important that you dot the eyes and cross the t's on that step three close out any out-of-state registrations and what I mean by out of state registrations let's say for example if I am doing business in the state of California that is where my original loc is registered but I also registered in the State of Florida I also registered in New York I also registered out of state in Texas I need to go through all of those out of state Secretary of State our comptrollers whatever the name is that they use in their state and I need to also file a dissolution in all of the other states that I was doing business in let me tell you why that is so important because states regulate entities they regulate all the different entities when you do not close out that registration you are going to get a letter from the state asking for a tax return asking for their annual fee and added to that is going to be penalties and interest and because you are the member if the actual entity doesn't pay it guess who's going to pay it you are going to pay it so just like in your regular state where you set up your LLC go to all the foreign states that you're doing business file dissolutions with them get them stamped and make sure they send you a copy so you can unwind your Affairs and the states that you were doing business in the fourth thing is acquire a tax clearance certificate this is one of the most vital steps that you can do you want to get a tax clearance certificate and a tax clearance certificate says I have filed all my tax returns that were due within the state that I'm operating in that also includes the states that you are doing business in that are foreign states allow me to give an example I do business in the state of California and I also do business and about 10 other states I recently wound up my Affairs of doing business in the state of New York I wanted to make certain that the state of New York sent me a tax clearance certificate because I filed my final tax return in the state of New York when you file that final return is so imperative that you are the tax preparer check the box literally really that says this is the final return on a tax return there's a box of saints initial return there's a box that states final return if you do not check the box that says final return guess what's going to happen you're gonna have to file another return the subsequent year and you will not get your tax clearance certificate that tax clearance certificate says you no longer obligated to file a return in that state and you're no longer obligated to pay in that state that's a very important document for you to keep and this is something that you want to keep for a long period of time are your tax clearance certificates in states that do not have a filing requirement you also are going to need to get a clearance certificate it may not necessarily be an income tax clearance certificate it could be a franchise tax clearance certificate for example the state of Texas doesn't have state income tax but when you own an LLC you have to file a franchise tax return so you want to make sure you get your Franchise Tax clearance certificate and really dot all the eyes across all the t's across all the states that you're doing business in in the state of California they will not even allow you to dissolve your LLC until you have filed that final tax return I want to tell you about a situation I had a client that literally let an LLC go he did not dissolve that LLC he just walked away from it later on he had a new business he got a government contract they did some research on him and found out he had a business sitting out there with unfiled tax returns that did not look good on his part so they did not even allow him to go through with that government contract step five close out the business when I say close out the business what I mean by that is close out the business affairs with all of your vendors so you want to notify your vendors that you're no longer doing business you want to notify your creditors that you're no longer doing business if your business has assets you need to sell off the assets of the business and liquidate the business you don't just get to have a business where you've had a profit and loss form and a balance sheet that has money sitting in the bank account that has access it on the balance sheet equipment desks chairs Vehicles no no no you have to liquidate the assets of the business so either one you're gonna sell them are two you're gonna distribute them to you the member are the members now when you are winding down a business and closing it out you gotta look at the taxability when you are Distributing down assets to yourself you are in essence receiving money whether it's property or whether it's cash there is going to be a gain or a loss on the disposition of closing out your LLC it's not just that simple of doing paperwork so I your takeaway is to know that the final closeout has to be notifying vendors making sure creditors know you're no longer doing business and making sure you look at the proper tax implications of winding down your business so as a recap your steps are take a vote to dissolve your business fill out your dissolution paperwork file it with the Secretary of State make sure you close up the registrations and all of your States close out the business by notifying your creditors and dissolving by Distributing out all of the assets that is how you actually close out a business and dissolve an LLC and I told you if you stay to the end I will give you my personal advice so you can make certain that people are not going to get your ID number get the name of your business and go out there and start creating Credit in the name of your company what you need to do is execute a public filing that means that you're going to go to a local newspaper where they do public announcements for example you may have seen in the newspaper paper this person filed bankruptcy this person has passed away you're going to do a public filing that says John Smith Jane Smith is no longer operating as one two three LLC effective on this date the reason why you do that is because there are scammers out there that will get your information and they'll keep that business going unbeknownst to you the next thing you know you'll get a letter in the mail saying you owe money it'll be linked to your EIN number that is ultimately linked to your social security number and you can have a nightmare on your hands best practice is do a public filing notifying people you are no longer doing business so remember now that you know better you have to do better which is why I want you to like comment and subscribe so I can keep you updated on all things tax [Music] thank you