Dissolving A Washington LLC

For any number of reasons, businesses end. If you have a Washington LLC, you may face the day when you have to shutter the company. Unfortunately, it’s not as simple as turning out the lights. Instead, the LLC must be dissolved, wound up, and terminated according to procedures set out in the Washington Limited Liability Company Act or in the LLC’s organizational documents, like the LLC agreement.

Related: How To Form A Washington LLC

Causes of Dissolution

Many events can cause an LLC to dissolve, including the following set out in RCW 25.15.265:

• The dissolution date, if any, specified in the certificate of formation
• The happening of events specified in the LLC agreement
• The written consent of all members
• 90 days following an event of disassociation of the last remaining members
• Judicial decree of dissolution
• Administrative dissolution by the secretary of state (typically for failure to file an annual report)

The focus of this post will be on voluntary dissolution by the members.

Dissolution By Choice

The members of an LLC may choose to voluntarily dissolve the LLC. This could be as a result of the sale of the LLC’s assets, a deadlock over how the business will continue to operate, or any number of other events.

Whatever the reason, if you’re dissolving your Washington LLC, you should follow the steps below (likely with the help of your attorney).

1. Start by formally approving the dissolution at the entity level. Members must dissolve the LLC by unanimous written consent, unless the LLC agreement provides otherwise.
2. After approving dissolution, an LLC may, but is not required to, file a certificate of dissolution with the Washington Secretary of State. Some LLCs may forego this step to avoid additional costs and/or out of a desire to avoid publicizing the fact that the entity has dissolved. Still, it is typically wise to file a certificate of dissolution to protect the members against personal liability that could arise during the winding up phase of the dissolution.
3. Finally, the LLC should proceed to the winding up process. This process is when the LLC finalizes its affairs, liquidates its assets, discharges its debts, distributes any remaining assets to members, and other related steps.

Note that an LLC may revoke the dissolution under certain circumstances. If the LLC filed a certificate of dissolution with the Washington Secretary of State, then it has 120 days from the date of that filing to revoke its dissolution. If, on the other hand, the LLC did not file a certificate of dissolution, then it may revoke its dissolution at any time.

Winding Up

Once an LLC has been dissolved, the members or managers (depending on how the LLC is managed) are typically responsible for winding up the LLC’s affairs. This involces liquidating its assets, discharging debts, distributing remaining assets to members.

There are statutory requirements that must be observed during the winding up process. For instance, the assets must be distributed in a certain order (e.g., creditors of the LLC must be paid off before members’ capital contributions are returned). You should work with an attorney to ensure you’re in compliance with the LLC Act as you wind up the LLC.

Takeaways

Starting your LLC required you to observe certain formalities; ending it will too. Make sure you’re aware of your responsibilities in dissolving the LLC and winding up its affairs, or work with a Washington business attorney if you’re not sure.