How to Dissolve a Business in Washington | Essential Steps

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Dissolve Washington 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 Washington.

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 Washington, 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 Washington

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

To settle your Washington 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 Washington Secretary of State to dissolve your Washington 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 Washington Secretary of State‘s website. Access the Washington Secretary of State’s website and navigate to the Corporations Division for the required documents.
  2. Fill out the Articles of Dissolution Form with the required information, including your Washington business name, the date of dissolution, and any other necessary details.
  3. Pay the filing fee of $20 in the Washington Secretary of State’s office.
  4. Submit the completed form and payment to the Washington Secretary of State’s office, either by mail or online, depending on your Washington’s filing options.

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

Mail to: 
Washington Secretary of State
Secretary of State, Corporations Division. P.O. Box 40234

Filling Fee:
$20

Step 6: Notify the IRS and Government Agencies

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

Step 7: Cancel Licenses, Permits, and Insurance Policies

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

The cost of dissolving an LLC in Washington can vary based upon various factors. The Washington Articles of the Dissolution filing fee cost $20. 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 Washington Dissolves

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

After the Washington LLC Dissolution

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

To create a new Washington 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 Washington 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 Certificate of Formation: Submit the Certificate of Formation with the Washington 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 Washington 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 Washington LLC?
To dissolve your Washington LLC, you’ll need to file articles of dissolution with the Washington Secretary of State.
Can I dissolve a Washington LLC online?
Yes, you can file articles of dissolution for a Washington LLC online through the Washington Secretary of State’s website.
How much does it cost to dissolve a Washington LLC?
$180.00 for domestic LLC, $200.00 for foreign LLC
Do I need to have the members’ approval to dissolve a Washington LLC?
Yes, Washington state law requires an LLC to be dissolved if it is approved by a 2/3 vote of the members.
What happens if I don’t properly dissolve my Washington LLC?
If you don’t properly dissolve your LLC in Washington, you’ll be responsible for paying any taxes or fees that are still outstanding and could be subject to legal action.
Can I be held personally liable for my Washington LLC’s debts after dissolution?
In Washington, LLC owners generally have limited liability protection, so you typically won’t be personally liable for your LLC’s debts after dissolution.
How long does it take to dissolve a Washington LLC?
It typically takes about 3-5 business days for the Washington Secretary of State to process your articles of dissolution.
Can I dissolve my Washington LLC without a lawyer?
Yes, you can dissolve your Washington LLC without a lawyer, but it’s a good idea to consult with one to avoid any potential legal issues.
Are there any tax implications of dissolving a Washington LLC?
Yes, there may be tax implications of dissolving a Washington LLC, and you may need to file final tax returns for the LLC.
How do I notify creditors of my Washington LLC’s dissolution?
You’re not required to notify creditors directly, but you’ll need to publish a notice of your LLC’s dissolution in a newspaper of general circulation in the county where the LLC’s registered office is located.
Can I dissolve my Washington LLC without settling all debts and obligations?
No, all debts and obligations must be settled before dissolving a Washington LLC.
Can I revive a dissolved Washington LLC?
Yes, you can revive a dissolved Washington LLC by filing a certificate of renewal and paying all outstanding fees and taxes.
Will my Washington LLC be automatically dissolved if it becomes inactive?
No, a Washington LLC won’t be automatically dissolved if it becomes inactive, but you’ll still be responsible for paying any necessary taxes and fees.
Can I dissolve a Washington LLC if it’s involved in a lawsuit?
If your LLC is involved in a lawsuit, you’ll need to contact an attorney to help you navigate the dissolution process.
What is the difference between filing for dissolution and surrendering the Washington LLC?
Surrender of license refers to a foreign entity or individual. It terminates its right to any registered activity in Washington, while Dissolution is a local entity can choose to dissolve in Washington.
What is the deadline for dissolving a Washington LLC?
There’s no specific deadline for dissolving a Washington LLC, but you should do so as soon as possible after the decision to dissolve has been made.
Can I sell the assets of my Washington LLC before dissolving it?
Yes, you can sell your LLC’s assets prior to dissolving the LLC, but you’ll need to settle any outstanding debts and obligations before closing the company.
What is the process for transferring a Washington LLC to a new owner?
The process for transferring ownership of a Washington LLC will depend on your specific circumstances, so consult with a lawyer to ensure the transfer is done properly.
Do I need to file a final Washington state tax return for my dissolved LLC?
Yes, you should file a final tax return to indicate that your LLC is no longer required to file taxes in Washington.
Can I dissolve my Washington LLC if it has outstanding tax obligations?
No, all tax obligations must be settled before dissolving a Washington LLC.
How long does it take for the Washington state government to process my LLC dissolution?
It may take 3-5 business days for the Washington Secretary of State to process your LLC dissolution.
Do I need a registered agent to dissolve my Washington LLC?
Your Washington LLC must have a registered agent at the time of dissolution, but you can designate a new registered agent when you file articles of dissolution.
Will I get a refund of Washington state fees paid when dissolving an LLC?
No, Washington state fees paid when dissolving an LLC are non-refundable.
Can I dissolve my Washington LLC on my own without using a service?
Yes, you can dissolve your Washington LLC without using a service, but it’s a good idea to consult with a lawyer to ensure the process is done properly.
Can I dissolve a Washington LLC if it has employees?
Yes, you can dissolve a Washington LLC even if it has employees, but you’ll need to satisfy any outstanding wage payments and other legal obligations related to your employees.
Do I need to file a notice of dissolution with the Washington Secretary of State?
Yes, you’ll need to file articles of dissolution with the Washington Secretary of State to dissolve your LLC.
Can a lawsuit prevent me from dissolving my Washington LLC?
If a lawsuit is pending against your LLC, you’ll need to consult with an attorney before dissolving the LLC.
What happens to my Washington LLC’s name after dissolution?
Once dissolved, your LLC’s registered name in Washington is no longer available for use.
What documentation do I need to provide to the Washington Secretary of State to dissolve my LLC?
To dissolve your Washington LLC, you’ll need to file articles of dissolution, which require several pieces of information about your LLC’s operation and reason for dissolution.
Can I dissolve my Washington LLC online?
Yes, you can dissolve your Washington LLC online through the Business Licensing Service website.
What do I need to include in my Certificate of Dissolution for my Washington LLC?
Your Certificate of Dissolution must include your LLC’s name, the date of dissolution, and a statement that the LLC’s debts and obligations have been paid or will be paid.
How much does it cost to dissolve my Washington LLC?
It costs $30 to file a Certificate of Dissolution for your Washington LLC.
How long does it take for the Washington Secretary of State to process my Certificate of Dissolution?
It can take up to five business days for the Washington Secretary of State to process your Certificate of Dissolution.
Do I need to file a tax return after dissolving my Washington LLC?
Yes, you must file a final tax return for your Washington LLC within 90 days of its dissolution.
Do I need to cancel my Washington LLC’s business license after dissolving it?
Yes, you must cancel your Washington LLC’s business license after dissolving it.
How do I cancel my Washington LLC’s business license?
You can cancel your Washington LLC’s business license online through the Business Licensing Service website or by mailing a Business License Application, cancellation request.
Can I reopen my Washington LLC after I dissolve it?
No, once you dissolve your Washington LLC, you cannot reopen it.
Do I need to notify creditors and customers about the dissolution of my Washington LLC?
Yes, you should notify your creditors and customers about the dissolution of your Washington LLC.
Can I dissolve my Washington LLC if it has outstanding debts?
Yes, you can dissolve your Washington LLC if it has outstanding debts, but you must pay those debts before dissolving.
What happens to my Washington LLC’s assets after it is dissolved?
After your Washington LLC is dissolved, its assets are distributed to its members and creditors.
Can I dissolve my Washington LLC if it has pending lawsuits?
Yes, you can dissolve your Washington LLC if it has pending lawsuits, but you must pay any judgments or settlements before dissolving.
Can I dissolve my Washington LLC if it has employees?
Yes, you can dissolve your Washington LLC if it has employees, but you must follow all applicable federal and state laws and regulations related to employment.
Do I need to notify the Washington Department of Revenue about the dissolution of my LLC?
Yes, you must notify the Washington Department of Revenue about the dissolution of your LLC.
Will I need to file a Schedule K-1 after dissolving my Washington LLC?
You may need to file a Schedule K-1 for the tax year in which you dissolve your Washington LLC.
What happens to my Washington LLC’s operating agreement after it is dissolved?
Your LLC’s operating agreement becomes void after it is dissolved.
Can I transfer my Washington LLC’s name to another business?
No, after you dissolve your Washington LLC, its name becomes available to other businesses.
Can I change my Washington LLC’s name before dissolving it?
Yes, you can change your Washington LLC’s name before dissolving it, but you must follow the Washington Secretary of State’s rules for changing an LLC’s name.
What happens if I don’t pay my Washington LLC’s annual report fee?
If you don’t pay your Washington LLC’s annual report fee, the Washington Secretary of State may administratively dissolve your LLC.
What is the deadline for filing my Washington LLC’s final tax return?
The deadline for filing your Washington LLC’s final tax return is 90 days after its dissolution.
Do I need to notify the Washington Employment Security Department about the dissolution of my LLC?
Yes, you must notify the Washington Employment Security Department about the dissolution of your LLC.
Do I need to notify the Washington Labor & Industries Department about the dissolution of my LLC?
Yes, you must notify the Washington Labor & Industries Department about the dissolution of your LLC.
Can I dissolve my Washington LLC if it is a foreign LLC?
Yes, you can dissolve your Washington foreign LLC by filing a Withdrawal of Registration with the Washington Secretary of State.
How do I withdraw my foreign LLC registration in Washington?
To withdraw your foreign LLC registration in Washington, you must file a Withdrawal of Registration with the Washington Secretary of State.
Will I need to pay a fee to withdraw my foreign LLC registration in Washington?
Yes, you must pay a fee to withdraw your foreign LLC registration in Washington.
What are the consequences of not cancelling my Washington LLC’s business license after it is dissolved?
If you don’t cancel your Washington LLC’s business license after it is dissolved, you may still be liable for taxes and fees associated with the license.
Can I change my Washington LLC’s registered agent before dissolving it?
Yes, you can change your Washington LLC’s registered agent before dissolving it, but you must follow the Washington Secretary of State’s rules for changing a registered agent.

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Conclusion

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

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