Administrative Dissolution

Administrative Dissolution

In most states, if your limited liability company has ceased to do business and you no longer wish to keep it active, it is not necessary to take any special action to dissolve it. It will automatically be dissolved by the state if you fail to file your annual report. However, the drawback of dissolving your company this way is that the fees to reinstate the company can be high if you ever decide you need to start the company again. You may have to pay unpaid annual report fees as well as a penalty.  Also, relying on administrative dissolution may result in additional taxes or fees incurred even after the business stops operating because the proper dissolution paperwork has not been filed.

If your company is struggling with debts that it is unable to pay at the time of dissolution, you would be better off to formally dissolving it or having it file for bankruptcy. Otherwise, there is a chance that you could be held personally liable for the debts.

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