How to Dissolve a Business in Arizona | Essential Steps

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Dissolve Arizona LLC

Deciding to dissolve a Limited Liability Company can be difficult for business owners. Still, it is sometimes necessary due to changes in the business landscape, financial challenges, or personal reasons. Dissolving a business requires specific steps and regulations to complete the process correctly and legally. This comprehensive guide will teach you how to dissolve a business in Arizona.

Webinarcare Editorial Team will help you easily dissolve your business. You must be guided by all the factors gathered in this article.

How to Dissolve a Business in Arizona

If you are starting an LLC in Arizona, having an operating agreement is one of the key requirements in dissolving a business. Before starting the legal paperwork, there are a few things to remember. Initially, confirm that all LLC members agree with closing the business. Once everyone is ready, voting should be used to document everyone’s assent. They must vote in favor of the dissolution before the legal procedure may begin. The procedures for the dissolution are listed below.

How to Dissolve a Business in Arizona

Dissolving a business in Arizona requires following specific steps to ensure a smooth and legally compliant process. The process usually includes the following steps:

Step 1: Make the Decision

Before dissolving your business, ensure this decision is right for your Arizona business. Consider discussing the decision with your business partners, members, or legal counsel to weigh the pros and cons and determine if dissolving the business is best.

Step 2: Hold a Formal Vote

Once you’ve decided to dissolve your Arizona business, you’ll need to hold a formal vote among the members to approve the dissolution. This step is important because it ensures that all members know and agree to the decision to dissolve the business.

To hold a formal vote:

  • Review your Arizona Operating Agreement to determine the required voting procedures, such as the percentage of affirmative votes needed for approval.
  • Notify all Arizona members of the upcoming vote and give them sufficient time to review the matter and make an informed decision.
  • Conduct the vote according to the procedures outlined in your operating agreement.
  • Record the vote results in your business meeting minutes or a written resolution.

If most members approve the dissolution, you can proceed with the dissolution process.

Get a Professional Service

It’s important to get legal assistance when dissolving an LLC. With that, you must have a Statutory Agent. Ensure that the Statutory Agent you choose is qualified and legal since they will file the Article of Dissolution for your LLC. We reviewed the Best Statutory Agent Services in Arizona for you to check out.

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Step 3: Settle the Outstanding Debts and Liabilities

You must settle all outstanding debts and liabilities before dissolving your Arizona business. This includes paying off loans, settling pending lawsuits, paying owed taxes, and fulfilling any remaining contractual obligations. You can inform your Arizona Business Attorney to ensure it is settled.

To settle your Arizona business’ debts and liabilities:

  • Review your business’ financial records to identify all outstanding debts and liabilities.
  • Contact creditors, lenders, and other parties to whom your business owes money or obligations, and arrange for payment or settlement.
  • If your business does not have sufficient funds or assets to cover all outstanding debts and liabilities, consult with legal counsel to determine the best course of action for settling these obligations.

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Step 4: Distribute the Remaining Assets to Members

Once all debts and liabilities have been settled, you can distribute any remaining assets to the business members. Your operating agreement should do this or, if no such agreement exists, in proportion to each member’s ownership interest in the business.

To distribute assets:

  • Determine the fair market value of the remaining assets, such as real estate, equipment, or inventory. 
  • Calculate each member’s ownership interest in the business based on the operating agreement or their initial capital contribution.
  • Distribute the assets to each member according to their ownership interest.
  • Keep detailed records of all asset distributions for tax and legal purposes.

Step 5: File the Articles of Dissolution

After settling debts and distributing assets, you’ll need to file the Articles of Dissolution with the Arizona Secretary of State to dissolve your Arizona business officially. This document provides the state with notice that your business is ceasing operations and will no longer conduct business.

To file the Articles of Dissolution:

  1. Obtain the appropriate form from the Arizona Secretary of State‘s website. Access the Arizona Corporation Commission’s website and navigate to the Business Services section to find the required documents.
  2. Fill out the Articles of Dissolution Form with the required information, including your Arizona business name, the date of dissolution, and any other necessary details.
  3. Pay the filing fee of $35 (regular processing), $85 (expedited processing) in the Arizona Secretary of State’s office.
  4. Submit the completed form and payment to the Arizona Secretary of State’s office, either by mail or online, depending on your Arizona’s filing options.

Once your Articles of Dissolution have been processed and approved, your Arizona business will officially be dissolved.

Mail to: 
Arizona Secretary of State
Arizona Corporation Commission, Corporate Filings Section, 1300 W. Washington St., Phoenix, AZ 85007

Filling Fee:
$35 (regular processing), $85 (expedited processing)

Step 6: Notify the IRS and Government Agencies

After dissolving your business with the Arizona Secretary of State, you’ll need to notify the Internal Revenue Service (IRS) and other Arizona government agencies of the dissolution. This is important to ensure your business complies with tax laws and other regulations.

To notify the IRS of the dissolution:

  1. File your final federal tax return using Form 1065 and check the box indicating that it is the final return for your business.
  2. Cancel your Employer Identification Number (EIN) in Arizona by mailing a letter to the IRS at the address where you filed your tax return. Include your EIN, business name, and reason for cancellation in the letter.
  3. Update your Arizona business status with any other relevant government agencies, such as the Arizona Department of Revenue, Department of Labor, and local licensing and permitting offices.

Step 7: Cancel Licenses, Permits, and Insurance Policies

To fully dissolve your Arizona business, you’ll need to cancel any business licenses, permits, and insurance policies associated with your business. This may include Arizona Business Licenses, professional licenses, sales tax permits, and any other permits required for your industry.

You must contact the issuing agency to cancel your licenses and permits and follow their specific cancellation procedures. You should also contact your insurance provider to cancel any remaining business insurance policies. With the cancellation of the mentioned licenses, permits, and Business Insurances in Arizona, you also need to remove a Statutory Agent since he won’t be able to continue filing documents for your business unless you are the Statutory Agent of your business. 

Step 8: Maintain Records of the Dissolution Process

For legal and tax purposes, it’s important to maintain detailed records of the steps taken to dissolve your Arizona business. This includes documentation of the formal vote to dissolve the business, debt settlements, asset distribution records, and copies of filed state and federal tax returns.

Keep these records for at least seven years, as they may be needed in the event of an IRS audit or other legal issues arising from the dissolution.

Cost of Dissolving an LLC in Arizona

The cost of dissolving an LLC in Arizona can vary based upon various factors. The Arizona Articles of the Dissolution filing fee cost $35 (regular processing), $85 (expedited processing). Other costs include any outstanding taxes or debts the business owes and potential costs for settling business contracts or selling business assets.

It’s also important to factor in professional fees, such as if you hire an attorney or accountant to assist with the dissolution process. After the LLC is dissolved, the remaining company assets are divided among the members. The exact breakdown of these costs can often be complex and will depend on the specific circumstances of the LLC, so consulting with a legal or financial advisor can be helpful.

Reasons Why an LLC in Arizona Dissolves

There are numerous reasons why an LLC in Arizona dissolves, and these reasons could impact other LLCs. It is best to understand the why’s and how to deal with it rather than knowing that your LLC may dissolve sooner or later. Here is the list of possible reasons why an LLC dissolves.

  1. Expired Duration: In Arizona, an LLC will automatically dissolve if it reaches the end of its defined duration stated in the Articles of Organization.
  2. Member Vote: An LLC may dissolve in Arizona if the members vote for dissolution. Usually, the LLC Operating Agreement outlines the percentage of member votes required to dissolve the LLC.
  3. Judicial Dissolution: A court in Arizona may order the dissolution of an LLC if it is in the best interests of the members, especially in cases of fraud, illegal activities, or oppressive behavior.
  4. Bankruptcy: If the LLC becomes insolvent and cannot pay its debts, it may be forced into bankruptcy. This usually leads to the dissolution of the LLC.
  5. Non-compliance: If the LLC does not comply with state laws or fails to meet legal requirements, such as filing annual reports or paying taxes, the state may forcibly dissolve the LLC.
  6. Merger or Consolidation: If the LLC in Arizona merges or consolidates with another company and the LLC is not the surviving entity, it will be dissolved.
  7. Death or Withdrawal of a Member: Unless specified otherwise in the Operating Agreement, the death, withdrawal, bankruptcy, or incompetence of a member may cause the LLC to dissolve.

Please note that the process for dissolution typically includes settling all business debts, distributing any remaining assets among the members, and filing a formal notice of dissolution with the Arizona Secretary of State.

After the Arizona LLC Dissolution

Once your Arizona business has been dissolved, it typically cannot be reinstated or “taken back” after a few years. Instead, you would need to form a new LLC in Arizona if you wish to operate a business under a limited liability company structure again.

To create a new Arizona LLC, you would need to follow the standard formation process, which generally includes the following:

  • Choosing a Unique Business Name: Ensure that another business does not already use the name you choose in Arizona and complies with state-specific naming requirements.
  • Appointing a Statutory Agent: Designate a Statutory Agent who will be responsible for receiving legal correspondence on behalf of your LLC.
  • Filing Articles of Organization: Submit the Articles of Organization with the Arizona Secretary of State’s office, along with the required filing fee.
  • Creating an Operating Agreement: Draft an agreement outlining the rules and regulations governing your new LLC, including member roles, ownership percentages, and management structure.
  • Obtaining Necessary Licenses and Permits: Apply for any required business licenses, permits, and tax registrations with the appropriate state and local authorities.
  • Registering with the Internal Revenue Service (IRS): Obtain an Employer Identification Number (EIN) from the IRS, which will be necessary for tax purposes and other business activities.

Availability of the Business Name

When a business is in Arizona was dissolved, the business name becomes available for other business owners to use after a certain period. However, the specific rules and regulations regarding the availability of a dissolved business name can vary. Keep in mind that even if the name becomes available, other factors, such as trademarks or potential confusion with existing businesses, may still impact the ability of another business owner to use the name.

FAQs

How do I dissolve my Arizona LLC business?
You must file Articles of Termination with the Arizona Corporation Commission (ACC).
What is an LLC?
An LLC stands for Limited Liability Company. It’s a type of business structure that combines the liability protection of a corporation with the tax benefits of a partnership.
What is the Arizona Corporation Commission?
The Arizona Corporation Commission (ACC) is a government agency that regulates corporations, limited liability companies, and partnerships in the state of Arizona.
How much does it cost to dissolve an LLC in Arizona?
The fee to file Articles of Termination with the ACC is $35.
Do I need a lawyer to dissolve my Arizona LLC?
No, you don’t need a lawyer. But help from an expert is always advisable for legal and financial guidance.
Do I need to file any annual reports before I dissolve my Arizona LLC?
Yes. The LLC must be current with all required annual filings with the ACC before filing Articles of Termination.
How soon will my Arizona LLC be dissolved after I file the Articles of Termination?
It should be dissolved immediately or it might take few weeks
Can I dissolve my Arizona LLC if it’s not in good standing with the ACC?
No, the LLC must be in good standing with the ACC before it can be dissolved.
What happens after I file the Articles of Termination with the ACC?
The ACC will review your filing and notify you of its decision normally over email contact.
Can I revive my Arizona LLC after it has been dissolved?
Yes, it’s possible to revive your LLC in Arizona.
What is the process for reviving a dissolved Arizona LLC?
To revive a dissolved LLC in Arizona, including all pending fees must have been cleared and then the Certificate of Reinstatement should be filed with the ACC with requisite fees.
What are the consequences of not dissolving my Arizona LLC properly?
The business can accrue state penalties and eventually reach taxes as well but affect the ability to transact again in future.
How do I know if my Arizona LLC is in good standing?
You can check your LLC’s status with the ACC by looking up your business name.
Does my Arizona LLC need to file taxes before I dissolve it?
Yes, the LLC must file and pay all required taxes before filing Articles of Termination and the Arizona Department of Revenue must certify that all contributions and taxes are paid.
Can I file the Articles of Termination for my Arizona LLC by myself, or do I need a registered agent?
You can act as your LLC’s registered agent and file the Articles of Termination yourself.
Do I have to pay all of my LLC’s debts before I dissolve it in Arizona?
Yes, the LLC must pay all its debts before filing Articles of Termination.
What should I do if my Arizona LLC has no assets?
You must still pay all outstanding taxes and fees before filing Articles of Termination.
Can I dissolve my Arizona LLC if I have pending lawsuits?
No, you cannot dissolve your LLC if it has pending lawsuits.
Do I need to notify all of my LLC’s creditors and members before I dissolve it in Arizona?
Yes, you should contact your LLC’s creditors and members before/during the entire process.
Can I form a new Arizona LLC after dissolving my old one?
Yes, you can start a new LLC business in Arizona.
Can the dissolved LLC’s trade name be used for a new business?
Only if it has been renewed or reinstated after general closure.
Does dissolving my Arizona LLC affect my personal credit?
No, dissolving your LLC after its clearance would have no credit implications on personal credit accounts.
What if there is more than one owner in my Arizona LLC?
All owners/members should be in agreement for dissolution as per voting procedures with unanimous votes standing good in best interest of the company.
What should I do with my business assets in Arizona after my LLC has been dissolved?
Assets can be sold off for payment of outstanding debts or later auctioned to satisfy claims of receivership upon liquidating the company.
Can I be held personally liable for my Arizona LLC’s debts?
If finances and attribution are connected to membership liability or fraud involvements to personal financial background check, then members can be held responsible in case for unpaid taxes only it is paid by the company before closing.
How long does it take to dissolve an Arizona LLC?
Satisfying all pending liabilities and contributing accounts. Approval upon filling will take 2-3 business weeks usually.
Can I reopen my Arizona LLC after it’s been dissolved?
Yes, to re-establish your previous limited company status you require Clearances from tax contributory governmental departments to renew your enterprise.
Do I have to be a resident of Arizona to start an LLC in Arizona?
No, you don’t have to be a resident of Arizona.
How long does it take to dissolve an Arizona LLC business?
Dissolving an Arizona LLC business typically takes approximately two to four weeks from the time the articles of dissolution are filed.
What forms do I need to dissolve my Arizona LLC business?
You will need to file articles of dissolution with the Arizona Corporation Commission.
How much does it cost to dissolve an Arizona LLC business?
The filing fee for articles of dissolution is $35, as of 2021.
Does an Arizona LLC need to be in good standing before it can be dissolved?
Yes, your Arizona LLC must be in good standing and up to date with all required filings and fees.
What happens to my Arizona LLC business debts after it is dissolved?
Your Arizona LLC business debts will need to be paid off from any remaining assets before the dissolution is complete.
How do I inform Arizona tax authorities that my LLC is no longer active?
You will need to file final tax returns with the Arizona Department of Revenue once your Arizona LLC business has been dissolved.
Can I dissolve my Arizona LLC business if I have outstanding legal issues?
You may not be able to dissolve your Arizona LLC until any outstanding legal issues have been resolved.
Can I revoke the dissolution of my Arizona LLC business if I change my mind?
After your Arizona LLC has been dissolved, you cannot simply revoke the dissolution and reactivate the business.
Will I receive a refund for any Arizona LLC business fees paid after the date of dissolution?
No, you will not receive a refund for any fees paid after the date of dissolution for your Arizona LLC.
How do I close my Arizona LLC business bank accounts?
You will need to contact your bank and follow their procedures to close your Arizona LLC business bank accounts.
Can I use the name of my dissolved Arizona LLC business for a new business?
No, you cannot use the name of your dissolved Arizona LLC business for a new business unless you register it as a new name.
Do I need to notify my customers and employees when dissolving my Arizona LLC business?
While you do not have a legal obligation to notify customers and employees of dissolving your Arizona LLC business, it is recommended to inform them.
How long do I have to revive my Arizona LLC business after it has been dissolved?
You have up to 12 months from the date of dissolution to revive your Arizona LLC business.
Can I voluntarily dissolve my Arizona LLC business without notifying members or other owners?
As a member or owner of your Arizona LLC, you have a fiduciary responsibility to notify all stakeholders of your intent to dissolve.
What happens if I do not file articles of dissolution for my Arizona LLC business?
If you fail to file articles of dissolution for your Arizona LLC business, you will continue to be assessed fees and taxes.
Can I dissolve my Arizona LLC business without consulting a lawyer?
You can dissolve your Arizona LLC business without a lawyer, but consulting one is recommended to ensure compliance with all legal requirements.
What information do I need to provide when filing articles of dissolution in Arizona?
You will need to provide your Arizona LLC name, address, registered agent, and the reason for dissolution when filing articles of dissolution.
Can I dissolve my Arizona LLC business myself if I am not a resident of Arizona?
Yes, as long as you meet the requirement of having at least one member residing in Arizona.
How can I verify that my Arizona LLC business has been dissolved correctly?
You can check the status of your Arizona LLC on the Arizona Corporation Commission’s website.
What happens to my Arizona LLC business assets after it is dissolved?
Your Arizona LLC business assets will need to be distributed to members or owners upon dissolution.
Can I apply for a new LLC in Arizona after dissolving my previous LLC business?
Yes, you can form a new LLC in Arizona after dissolving your previous LLC business.
Will I be held personally liable for Arizona LLC business debts after it is dissolved?
You may still be held personally liable for Arizona LLC business debts after it is dissolved if you did not properly distribute assets.
Can I dissolve my Arizona LLC business after it has been sued?
Yes, you can dissolve your Arizona LLC business after it has been sued, but legal proceedings may continue despite the dissolution.
How can I get a copy of the articles of dissolution for my Arizona LLC business?
You can request a certified copy of your Arizona LLC business articles of dissolution from the Arizona Corporation Commission.
Can I dissolve my Arizona LLC business while I am in bankruptcy?
You may not be able to dissolve your Arizona LLC business while in bankruptcy without first obtaining permission from the bankruptcy court.
What happens to employees of my dissolved Arizona LLC business?
Employees may need to be given notice of dissolution and may be owed unpaid wages, vacation pay, severance, or other benefits.
How can I dissolve my Arizona LLC business if it has been locked out of the management area?
You may need to seek legal assistance to regain access to your Arizona LLC business management area before filing articles of dissolution.

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Conclusion

Dissolving Arizona business can be complex and time-consuming, but following the steps outlined in this guide will help ensure a smooth and successful dissolution. By conducting a formal vote, settling debts and liabilities, distributing assets, filing the Articles of Dissolution, notifying government agencies, and canceling business licenses and permits, you can legally dissolve your Arizona business and move forward with the next chapter of your professional life.

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