How to Dissolve a Business in Minnesota | Essential Steps

Steve Bennett
Business Formation Expert  |   Fact Checked by Editorial Team
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Dissolve Minnesota 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 Minnesota.

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

If you are starting an LLC in Minnesota, 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 Minnesota

Dissolving a business in Minnesota 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 Minnesota 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 Minnesota 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 Minnesota Operating Agreement to determine the required voting procedures, such as the percentage of affirmative votes needed for approval.
  • Notify all Minnesota 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 Registered Agent. Ensure that the Registered Agent you choose is qualified and legal since they will file the Article of Dissolution for your LLC. We reviewed the Best Registered Agent Services in Minnesota 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 Minnesota business. This includes paying off loans, settling pending lawsuits, paying owed taxes, and fulfilling any remaining contractual obligations. You can inform your Minnesota Business Attorney to ensure it is settled.

To settle your Minnesota 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 Minnesota Secretary of State to dissolve your Minnesota 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 Minnesota Secretary of State‘s website. Access the Minnesota Secretary of State’s website and navigate to the Business Services section for the required documents.
  2. Fill out the Articles of Dissolution Form with the required information, including your Minnesota business name, the date of dissolution, and any other necessary details.
  3. Pay the filing fee of $30 in the Minnesota Secretary of State’s office.
  4. Submit the completed form and payment to the Minnesota Secretary of State’s office, either by mail or online, depending on your Minnesota’s filing options.

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

Mail to: 
Minnesota Secretary of State
Minnesota Secretary of State — Business Services, Retirement Systems of Minnesota Building, 60 Empire Drive, Suite 100, St Paul, MN 55103

Filling Fee:
$30

Step 6: Notify the IRS and Government Agencies

After dissolving your business with the Minnesota Secretary of State, you’ll need to notify the Internal Revenue Service (IRS) and other Minnesota 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 Minnesota 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 Minnesota business status with any other relevant government agencies, such as the Minnesota Department of Revenue, Department of Labor, and local licensing and permitting offices.

Step 7: Cancel Licenses, Permits, and Insurance Policies

To fully dissolve your Minnesota business, you’ll need to cancel any business licenses, permits, and insurance policies associated with your business. This may include Minnesota 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 Minnesota, you also need to remove a Registered Agent since he won’t be able to continue filing documents for your business unless you are the Registered 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 Minnesota 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 Minnesota

The cost of dissolving an LLC in Minnesota can vary based upon various factors. The Minnesota Articles of the Dissolution filing fee cost $30. 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 Minnesota Dissolves

There are numerous reasons why an LLC in Minnesota 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 Minnesota, 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 Minnesota 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 Minnesota 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 Minnesota 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 Minnesota Secretary of State.

After the Minnesota LLC Dissolution

Once your Minnesota 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 Minnesota if you wish to operate a business under a limited liability company structure again.

To create a new Minnesota 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 Minnesota and complies with state-specific naming requirements.
  • Appointing a Registered Agent: Designate a Registered 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 Minnesota 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 Minnesota 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

Can I voluntarily dissolve my Minnesota LLC?
Yes, as the owner of the LLC, you have the power to voluntarily dissolve it.
What are the reasons for dissolving a Minnesota LLC?
Some reasons for dissolving a Minnesota LLC can include retirement of owners, financial struggles, change of business structure, or a lack of profitability.
What is the process to dissolve a Minnesota LLC?
To dissolve a Minnesota LLC, you must file a certificate of dissolution with the Minnesota Secretary of State.
Is there a fee to dissolve a Minnesota LLC?
Yes, there is a $30 fee to file a certificate of dissolution with the Minnesota Secretary of State.
How long does it take to dissolve a Minnesota LLC?
Typically, it takes a few weeks to several months to completely dissolve a Minnesota LLC.
Can a Minnesota LLC be dissolved without the consent of all members?
No, a Minnesota LLC can only be dissolved with the unanimous written consent of all members.
What happens to the assets of a dissolved Minnesota LLC?
The assets of a dissolved Minnesota LLC are sold and creditors are paid in order of priority.
Does a dissolved Minnesota LLC cease to exist immediately?
No, a dissolved Minnesota LLC continues to exist for winding-up purposes until all of its assets are distributed.
Can a dissolved Minnesota LLC sue or be sued?
Yes, a dissolved Minnesota LLC can still sue or be sued if necessary.
Can a dissolved Minnesota LLC continue to do business?
No, a dissolved Minnesota LLC cannot continue to do business.
Will my Minnesota LLC automatically be dissolved if I don’t renew my annual registration?
No, failing to renew your annual registration will result in your LLC becoming inactive and incurring late fees.
Can a Minnesota LLC be dissolved involuntarily?
Yes, a Minnesota LLC can be dissolved involuntarily for reasons such as bankruptcy or court order.
Can a member of a Minnesota LLC petition for involuntary dissolution?
Yes, a member of a Minnesota LLC can petition for involuntary dissolution in certain circumstances.
Can I dissolve my Minnesota LLC online?
Yes, you can dissolve your Minnesota LLC online through the Minnesota Secretary of State’s website.
Can I mail in a certificate of dissolution for my Minnesota LLC?
Yes, you can mail in a certificate of dissolution along with the correct fee to the Minnesota Secretary of State.
Can a dissolved Minnesota LLC be reinstated?
Yes, a dissolved Minnesota LLC can be reinstated by filing an application for reinstatement and payment of all required fees.
Is there a time limit to reinstate a dissolved Minnesota LLC?
Yes, there is a three-year time limit to apply for reinstatement of a dissolved Minnesota LLC.
What happens to the name of a dissolved Minnesota LLC?
The name of a dissolved Minnesota LLC is still protected and cannot be used by another entity for six months after dissolution.
Can I dissolve my Minnesota LLC if it has outstanding tax liabilities?
No, all outstanding tax liabilities must be paid prior to dissolving a Minnesota LLC.
Does a dissolved Minnesota LLC need a tax clearance certificate?
Yes, a dissolved Minnesota LLC must obtain a tax clearance certificate before filing a certificate of dissolution.
Can a dissolved Minnesota LLC continue to renew licenses and permits?
No, a dissolved Minnesota LLC cannot renew licenses or permits since it is no longer in business.
Can a dissolved Minnesota LLC keep its bank account open?
No, a dissolved Minnesota LLC must close all of its bank accounts.
What if I don’t file a certificate of dissolution for my Minnesota LLC?
You will continue to be responsible for registering and maintaining all licenses and authorizations as if your LLC was still active.
Can I dissolve my Minnesota LLC if I have outstanding liabilities or debts?
Yes, but you will likely need to pay off your debts and liabilities first before dissolving your Minnesota LLC.
What happens if my Minnesota LLC has assets remaining after everything is paid off?
The remaining assets will be distributed among the members of the Minnesota LLC.
What happens to my operating agreement when my Minnesota LLC is dissolved?
The operating agreement is still enforceable for the purpose of dissolving the Minnesota LLC and distributing its assets.
Can a creditor force the dissolution of a Minnesota LLC?
Yes, if a creditor obtains a judgment against a Minnesota LLC and the LLC fails to pay it, the creditor can ask the court to dissolve the LLC.
How long should I wait after filing a certificate of dissolution before I dispose of my Minnesota LLC’s records?
You should wait at least six years after filing a certificate of dissolution before disposing of any business records.
How do I dissolve my Minnesota LLC?
You can dissolve your Minnesota LLC by filing Articles of Termination with the Minnesota Secretary of State.
What are the requirements for dissolving my Minnesota LLC?
You must have a majority of the members or managers of your Minnesota LLC agreeing to dissolve the business, and all taxes and fees must be paid up to date.
What if my Minnesota LLC has debts?
You will need to pay off or resolve any debts before dissolving your Minnesota LLC.
What forms do I need to complete to dissolve my Minnesota LLC?
You will need to complete the Articles of Termination form and the Certificate of Dissolution form for your Minnesota LLC.
Can my Minnesota LLC be dissolved by a court order?
Yes, if a court finds cause, it can order the dissolution of your Minnesota LLC.
How can I get more information about dissolving my Minnesota LLC?
You can visit the Minnesota Secretary of State’s website or consult with a lawyer knowledgeable in Minnesota LLC dissolution.
What happens when I file articles of termination for my Minnesota LLC?
Filing articles of termination for your Minnesota LLC officially ends your business and removes it from the records maintained by the Minnesota Secretary of State.
What is the fee for filing articles of termination for my Minnesota LLC?
As of 2021, the filing fee for articles of termination for a Minnesota LLC is $35.
Do I need to notify the Minnesota Department of Revenue when dissolving my LLC?
Yes, you must notify the Minnesota Department of Revenue that your LLC is being dissolved.
How do I notify the Minnesota Department of Revenue that my LLC is being dissolved?
You can complete a Notice of Intent to Terminate and Final Tax return Form for your Minnesota LLC.
Can I apply for a tax clearance certificate as part of the process of dissolving my Minnesota LLC?
Yes, you can apply for a tax clearance certificate as part of the process of dissolving your Minnesota LLC.
What is a tax clearance certificate, and why do I need one to dissolve my Minnesota LLC?
A tax clearance certificate is a document that proves all taxes owed by your Minnesota LLC have been paid. You need one to dissolve your LLC.
How do I apply for a tax clearance certificate for my Minnesota LLC?
You can apply for a tax clearance certificate by submitting a Request for Certificate of Clearance form to the Minnesota Department of Revenue.
What is a Certificate of Dissolution for a Minnesota LLC?
A Certificate of Dissolution is a document that legally dissolves your Minnesota LLC.
Where do I file my Certificate of Dissolution for my Minnesota LLC?
You file your Certificate of Dissolution for your Minnesota LLC with the Minnesota Secretary of State.
Is there a set timeframe for filing a Certificate of Dissolution for my Minnesota LLC?
No, there is no set timeframe for filing a Certificate of Dissolution for your Minnesota LLC.
Can I file my Certificate of Dissolution online for my Minnesota LLC?
Yes, you can file your Certificate of Dissolution online for your Minnesota LLC through the Minnesota Secretary of State’s website.
How long does it take to receive confirmation from the Minnesota Secretary of State that my Minnesota LLC is officially dissolved?
It can take up to two weeks to receive confirmation from the Minnesota Secretary of State once your Minnesota LLC is officially dissolved.
Can I change my mind about dissolving my Minnesota LLC after filing my Certificate of Dissolution?
No, once you submit your Certificate of Dissolution to the Minnesota Secretary of State, your Minnesota LLC is officially dissolved.
Do I need to cancel any licenses or permits held by my Minnesota LLC before dissolving it?
Yes, you must cancel any licenses or permits held by your Minnesota LLC before dissolving it.
How can I cancel any licenses or permits held by my Minnesota LLC?
You must contact any state agencies that granted your Minnesota LLC its licenses or permits to find out how to cancel them.
Do I need to notify suppliers, customers, and employees of my Minnesota LLC that I am dissolving the business?
Yes, before dissolving your Minnesota LLC, you should notify any suppliers, customers, and employees of the business’s status.
What kind of information should I provide when notifying suppliers, customers, and employees of my Minnesota LLC that I am dissolving the business?
You should provide a clear and concise explanation of the business’s status, how it will affect any projects or business transactions, and a final point of contact.
Will my Minnesota LLC be liable for any debts after it is dissolved?
No, any debts that your Minnesota LLC owes will remain the responsibility of the LLC’s members or managers.
Can I reopen my Minnesota LLC after it has been dissolved?
No, you cannot reopen your Minnesota LLC once it has been dissolved.
Can I use the name of my dissolved Minnesota LLC for another business?
Yes, the name of a dissolved Minnesota LLC can be reused for another business.
Can a dissolved Minnesota LLC be sued?
Yes, a dissolved Minnesota LLC can still be sued for any legal proceedings that were ongoing before it was dissolved.
How can I make sure that all debts and taxes are paid up to date before dissolving my Minnesota LLC?
You should speak with a tax professional or attorney knowledgeable in Minnesota LLC dissolution to ensure all taxes and debts are settled before dissolving your LLC.

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Conclusion

Dissolving Minnesota 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 Minnesota business and move forward with the next chapter of your professional life.

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