How to dissolve an LLC in Nevada?
29 October, 2021
In Nevada, limited liability can continue to exist till it has legally been dissolved. There are many reasons to dissolve an LLC in Nevada, such as an affirmative vote or written agreement from every member of the LLC, or if the time of dissolution is specified in the articles, or if a specific event mentioned in the operating agreement has occurred. If the board has decided to dissolve the LLC, the process has to be initiated as soon as possible. This is so that the LLC can avoid any penalties, tax liability, or legal issues.
To dissolve an LLC in Nevada, you will have to file dissolution documents with the secretary of state by mail or by online. Usually, the process takes about seven to ten business days from the filing day. Through the return service specified in the form, you will receive a copy of the confirmation. This article will give you an in-depth view of the entire process of dissolving an LLC in Nevada.
Cost of Dissolving an LLC
The filing fee for the dissolution is USD 100. Additionally, if you want a certified copy of the dissolution it will cost USD 30 per certificate.
The Process to Dissolve an LLC in Nevada
There are several things that you need to understand if you decide to dissolve an LLC in Nevada. A majority of the time, companies do not focus on the vital areas of the dissolution document. This can lead to the documents being rejected by the secretary of state. Here is the process which will ensure that your LLC is dissolved in the right way:
#1 LLC members meeting
The first step of dissolving a Limited Liability Company in Nevada is to set up a meeting for the owners or members. There needs to be a vote for dissolving the company, and every member has to agree on a resolution to adopt. This resolution should include the distribution of assets, obligations, and the payment of outstanding debts.
#2 Close the Tax A/C
The next vital step in this process is to close all the company's tax accounts. An LLC in Nevada can have many tax accounts such as Commercial Tax, Modified business tax, and federal tax. The state government or the IRS maintains each account. This is why it is essential that you coordinate with the IRS and the state government to make sure that all taxes are cleared. Here are common taxes your Nevada LLC needs to clear before dissolution:
- Sales and use tax: If your company is selling services that are taxable, you will have to clear the dues. This tax is filed monthly or quarterly.
- Employment Tax Return: This tax is for companies that have employees. It includes the employee withholding tax. Regular companies have to file Form 941, but small companies that have federal income taxes lower than USD 1000 are to file Form 944.
- CEP (Career Enhancement Program): AN LLC has to pay a tax of 0.05% of the taxable wages to the CEP. This is for them to dissolve the company.
- Unemployment insurance tax: LLCs in Nevada are required to pay unemployment insurance tax. This tax is 2.95% of the wages paid.
- Federal Tax deposits: you are required to file the Employer's quarterly tax return for you to close an LLC in Nevada using Form 941.
- Commercial Tax: If the LLC gross revenue is above USD 4 million in a taxable year, then they will have to pay this tax.
#3 Filing the Articles of Dissolution
The first step of the process of dissolution is to file the Articles of dissolution with the secretary of state. The article is to be submitted by a Nevada LLC that has voluntarily opted for dissolution. The articles is required to have the following information:
- Name of the LLC
- If the company has been dissolved or is to be dissolved
- The effective time and date of the LLC dissolution
- The type of cancellation or dissolution
A member or manager of the LLC being dissolved has to sign the articles of dissolution. The signing authority can also be the representation of the last member remaining in the company.
Pursuant to NV Rev Stat section 86.541 (2017), the signed articles of dissolution are to be filed with the secretary of state. The articles will become effective immediately after it is filed or at the specified time and date in the article. This date is not to be more than 90 days from the filing of the articles.
It can be mailed, emailed, or faxed to the Secretary of State with a USD 100 filing fee for the normal procedure. For the 24 hour or other services, the fees vary.
#4 Notifying the Creditors and Settling Claims
It is vital that you notify the creditors about the dissolution of the LLC. NV Rev Stat section 86.521 (2017) governs this and is a fundamental part of the distribution of assets. You will have to notify creditors about:
- If you have filed for dissolution or have any intention of dissolving the LLC
- If there are any outstanding claims, you are to give the creditors a mailing address to send their claim.
- Give a deadline to the creditors to submit their claims. From the day of notice, the standard time is 120 days.
- Give a statement that the company will not entertain any claims after the given deadline.
The claims sent to the LLC can be either accepted or rejected before the dissolution of the business. If it is accepted, then adequate arrangements have to be made to pay them.
#5 Distribution of the remaining assets
For an LLC to dissolve, the assets have to be distributed in relation to the members' ownership. For example: if Mr. Alex owns 30% of the company, Ben owns 25%, and Sam owns 20%. The assets will be distributed according to the ownership, Alex will get 30% of the remaining assets, etc. The distributions are to be reported by filing Form 990 to the IRS. The form you are required to file can be different depending on the gross receipts and assets.
An LLC in Nevada has many reasons to file for dissolution. If your LLC has a single member or multiple, the dissolution process for an LLC in Nevada can be complex if not carefully gone through.
Whether your company is a single-member LLC or has multiple members, dissolving an LLC in Nevada or an active business comes with its own set of problems and documentation including setting of taxes or claims.It is vital that when they do so, they follow the process to make sure that all the documents are complete, taxes are paid, and claims are settled for the dissolution to go smoothly. If not, then the dissolution might get rejected.
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