How to Dissolve a Business in Ohio | Essential Steps

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Dissolve Ohio 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 Ohio.

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 Ohio

If you are starting an LLC in Ohio, 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 Ohio

Dissolving a business in Ohio 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 Ohio 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 Ohio 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 Ohio Operating Agreement to determine the required voting procedures, such as the percentage of affirmative votes needed for approval.
  • Notify all Ohio 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 Ohio 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 Ohio business. This includes paying off loans, settling pending lawsuits, paying owed taxes, and fulfilling any remaining contractual obligations. You can inform your Ohio Business Attorney to ensure it is settled.

To settle your Ohio 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 Ohio Secretary of State to dissolve your Ohio 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 Ohio Secretary of State‘s website. Access the Ohio 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 Ohio business name, the date of dissolution, and any other necessary details.
  3. Pay the filing fee of $50 in the Ohio Secretary of State’s office.
  4. Submit the completed form and payment to the Ohio Secretary of State’s office, either by mail or online, depending on your Ohio’s filing options.

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

Mail to: 
Ohio Secretary of State
Ohio Secretary of State, P.O. Box 670, Columbus, OH 43216

Filling Fee:
$50

Step 6: Notify the IRS and Government Agencies

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

Step 7: Cancel Licenses, Permits, and Insurance Policies

To fully dissolve your Ohio business, you’ll need to cancel any business licenses, permits, and insurance policies associated with your business. This may include Ohio 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 Ohio, 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 Ohio 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 Ohio

The cost of dissolving an LLC in Ohio can vary based upon various factors. The Ohio Articles of the Dissolution filing fee cost $50. 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 Ohio Dissolves

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

After the Ohio LLC Dissolution

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

To create a new Ohio 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 Ohio 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 Ohio 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 Ohio 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 dissolve my Ohio LLC online?
Yes, you can file articles of dissolution online through the Ohio Secretary of State’s website.
What is the fee for dissolving my Ohio LLC?
The fee for filing articles of dissolution in Ohio is $50 if done online and $25 if done by mail.
Do I need to notify the Ohio Department of Taxation and pay any outstanding taxes before dissolving my LLC?
Yes, you need to pay any outstanding taxes and obtain official acknowledgment from the Ohio Department of Taxation that all taxes are paid and current before dissolving your LLC.
How long does it take for Ohio to process my dissolution filing?
It takes about 3-5 business days for the Ohio Secretary of State to process your dissolution filing.
Can I dissolve my Ohio LLC if it has outstanding debt or contract obligations?
Yes, but you need to ensure that any debts or obligations are accounted for and resolved properly before closing your business.
Can I revoke a dissolution filing if I change my mind?
Yes, an Ohio LLC can revoke its dissolution filing within 120 days of it being processed.
Is it required to publish notice of my LLC dissolution in Ohio?
No, publication of notice of dissolution is not required in Ohio.
Do I need to obtain a tax clearance before dissolving my Ohio LLC?
Yes, you need to obtain a tax clearance from the Ohio Department of Taxation before dissolving your Ohio LLC.
How do I obtain a tax clearance to dissolve my Ohio LLC?
You must file a completed and accurate Ohio Department of Taxation Application for Tax Clearance.
Can I dissolve my LLC in Ohio if it has multiple owners?
Yes, Ohio LLCs can be dissolved regardless of the number of owners.
Can I dissolve my Ohio LLC while in bankruptcy?
You can dissolve your Ohio LLC while in bankruptcy, but you need to ensure that all required bankruptcy paperwork is filed first.
Does Ohio require LLCs to file a final tax return after dissolving the business?
Yes, Ohio requires LLCs to file a final tax return.
Can someone else dissolve my Ohio LLC on my behalf?
If you don’t want to dissolve the LLC yourself, any authorized member, agent or attorney can file the articles of dissolution on your behalf.
Can I dissolve my Ohio LLC if there are outstanding government fines that I owe?
Generally, to dissolve an Ohio LLC, you need to resolve all outstanding fines and penalties owed to the government first.
If my Ohio LLC was not formed long ago, do I still have to file a final tax return before dissolving?
Yes, you still need to file a final tax return whether your Ohio LLC has been around for a short or long time.
Is there a penalty for dissolving an Ohio LLC before its expiration date on its registration papers?
There is no penalty for dissolving an Ohio LLC earlier than the expiration date in its registration papers.
Do I need to obtain any special documents before dissolving my Ohio LLC if I’ve completed name change filings from the Secretary of State?
No, there are no additional requirements to dissolve an Ohio LLC if you’ve already made any necessary name changes.
How can I dissolve my Ohio LLC if I do not know everyone who is part of it anymore?
The requisite signatories need to complete and file articles of dissolution with the Secretary of State, even if others’ home addresses are now unknown.
Who will receive notice that the Ohio LLC has been dissolved?
Registered agent or officers listed on the articles of the organization will receive notice.
Will members of staff working for the Ohio LLC be involved in the dissolution process?
Staff members usually are not included in the Ohio LLC dissolution process.
Does Ohio require a specific format for its dissolution documents?
Yes, Ohio has its own form for submitting dissolution documents, but you can still use a model that conforms to these requirements.
Is it mandatory to pay all creditors before dissolving an Ohio LLC business?
Ohio law allows firms to dissolve after addressing all debts according to the prorated value of their fees.
Are customers or anyone else impacted by my Ohio LLC expected to be involved in the business dissolution process?
In general, customers or other stakeholders have no involvement in dissolving an Ohio LLC.
How do I permanently dissolve my Ohio LLC business?
By filing a dissolution form, you officially and permanently dissolve a company in Ohio by notifying the state government that it no longer exists.
Does Ohio law permit LLCs that are currently facing legal proceedings to be dissolved?
No, Ohio law prohibits dissolving an LLC when a case against it is in progress without first receiving authorization to do so from a legal authority.
If I decide to dissolve my Ohio LLC and know everyone involved, am I able to terminate promptly?
Yes, doing so is possible, but you must cover any unpaid tax liabilities before finalizing the process.
If my LLC business was primarily dealing with clients beyond Ohio boundaries, how do I continue the dissolution?
Even with clients outside Ohio, companies must comply with state laws on ceasing business operations before permanently dissolving.
How long must I wait approximately after filing my Ohio LLC’s articles of dissolution before my business is officially closed?
About 3-5 business days after filing, your business will be officially dissolved.
How do I dissolve my Ohio LLC?
You can dissolve your Ohio LLC by filing Articles of Dissolution with the Ohio Secretary of State.
What is the filing fee to dissolve my Ohio LLC?
The filing fee to dissolve your Ohio LLC is $50.
Do I need to provide a reason for dissolving my Ohio LLC?
No, you do not need to provide a reason for dissolving your Ohio LLC.
Can I dissolve my Ohio LLC by mail?
Yes, you can dissolve your Ohio LLC by mail by submitting the Articles of Dissolution and the filing fee to the Ohio Secretary of State.
How long does it take to dissolve my Ohio LLC?
It takes approximately 5-7 business days for the Ohio Secretary of State to process your Articles of Dissolution.
Can I dissolve my Ohio LLC if it has outstanding debts?
Yes, you can dissolve your Ohio LLC if it has outstanding debts.
Will dissolving my Ohio LLC release me from personal liability?
No, dissolving your Ohio LLC does not release you from personal liability for past actions or debts.
What is the process for notifying creditors of my Ohio LLC’s dissolution?
You must notify creditors of your Ohio LLC’s dissolution by publishing notice in a newspaper in the county where your LLC’s principal place of business was located.
How long do I need to wait after publication to dissolve my Ohio LLC?
You may dissolve your Ohio LLC 30 days after publication of the notice.
Can I revoke the dissolution of my Ohio LLC?
Yes, you can revoke the dissolution of your Ohio LLC before the effective date of the dissolution.
What is the penalty for failing to dissolve my Ohio LLC?
There is no penalty for failing to dissolve your Ohio LLC, but you will continue to be responsible for all fees, taxes, and filings.
Do I need to file a final tax return for my Ohio LLC?
Yes, you need to file a final tax return for your Ohio LLC in the year of dissolution.
Do I need to obtain clearance from the Ohio Department of Taxation before dissolving my Ohio LLC?
No, you do not need to obtain clearance from the Ohio Department of Taxation before dissolving your Ohio LLC.
Can I reopen my dissolved Ohio LLC?
No, you cannot reopen a dissolved Ohio LLC. You must form a new LLC.
Can I transfer my Ohio LLC’s assets to another business during dissolution?
Yes, you can transfer your Ohio LLC’s assets to another business during dissolution.
Do I need to file with any other state agencies besides the Ohio Secretary of State to dissolve my Ohio LLC?
No, you do not need to file with any other state agencies besides the Ohio Secretary of State to dissolve your Ohio LLC.
How will I know when my Ohio LLC has been dissolved?
The Ohio Secretary of State will send you a certificate of dissolution when your Ohio LLC has been dissolved.
What happens to my Ohio LLC’s name after it has been dissolved?
Your Ohio LLC’s name will be made available for use by another entity.
Can I dissolve my Ohio LLC if it is in the middle of a lawsuit?
Yes, you can dissolve your Ohio LLC if it is in the middle of a lawsuit.
Will dissolving my Ohio LLC affect my business licenses and permits?
Yes, dissolving your Ohio LLC will terminate any business licenses and permits.
Will dissolving my Ohio LLC affect my liability insurance policies?
Yes, dissolving your Ohio LLC will terminate any liability insurance policies.
Can I dissolve my Ohio LLC independent of the other members?
No, all members of the Ohio LLC must approve the dissolution.
Can I withdraw from my Ohio LLC before dissolution?
Yes, you can withdraw from your Ohio LLC before dissolution, but you must follow the operating agreement and notify other members.
Will dissolving my Ohio LLC affect my ability to conduct business in other states?
Yes, dissolving your Ohio LLC may affect your ability to conduct business in other states. You may need to file a foreign llc formation in any other state you plan to do business in.
What happens to my Ohio LLC’s tax accounts after dissolution?
Your Ohio LLC’s tax accounts will remain open until all taxes due are paid.
Can I dissolve my Ohio LLC even if it has employees?
Yes, you can dissolve your Ohio LLC even if it has employees.
How do I distribute the assets of my Ohio LLC during dissolution?
You must distribute the assets of your Ohio LLC according to the operating agreement or if none outlined, to each member based on their proportionate ownership.

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Conclusion

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

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