How do I dissolve my LLC in Iowa?
An Iowa limited liability company (LLC) is recognized as a separate legal entity with a perpetual existence under Iowa law. An LLC is dissolved upon the first to occur of the following:
- An event or circumstance that the operating agreement states causes dissolution;
- The consent of all members;
- Once the company has at least one member, the passage of ninety consecutive days during which the company has no members;
- On application by a member, the entry by a district court of an order dissolving the company on the grounds that any of the following applies:
- The conduct of all or substantially all of the company’s activities is unlawful.
- It is not reasonably practicable to carry on the company’s activities in conformity with the certificate of organization and the operating agreement.
- On application by a member or transferee, the entry by a district court of an order dissolving the company on the grounds that the managers or those members in control of the company have done any of the following:
- Have acted, are acting, will act in a manner that is illegal or fraudulent
- Have acted or are acting in a manner that is oppressive and was, is, or will be directly harmful to the applicant.
Following its dissolution, the LLC continues to exist for the purpose of winding up its activities. Members and managers retain limited authority to take the actions necessary to wind up the LLC’s affairs. A manager or other person designated in the operating agreement is usually responsible for winding up an LLC. If a dissolved limited liability company has no members, the legal representative of the last person to have been a member may be appointed to wind up the activities of the company. If this legal representative declines or fails to wind up the LLC’s activities, members holding a majority in interest may nominate such a person. In some cases, the district court may order judicial supervision of the winding up of a dissolved limited liability company, including the appointment of a person to wind up the company’s activities.
Distribution of Assets
In winding up its activities, an LLC must first use its assets to pay all debts to creditors, including members who are creditors. Once an LLC has discharged all obligations to creditors, any remaining assets must first be distributed to each person owning a transferable interest that reflects contributions made by a member and not previously returned. Generally, any assets left after that must be distributed in equal shares among members and dissociated members.
Claims Against Dissolved LLCs
An LLC may also give notice of a known claim, with the deadline of the receipt of a claim to be at least 120 days after the notice is received. It may also publish notice of its dissolution in a newspaper, with action to enforce such claim to commence within 5 years of publication.
Administrative dissolution is an action taken by the Secretary of State that results in the loss of a business entity’s rights, powers, and authority. In some cases, an LLC might also be subject to administrative dissolution. Administrative dissolution is an action the Secretary of State takes that results in the loss of a business entity’s rights, powers, and authority. In some cases, an LLC might also be subject to administrative dissolution. Administrative dissolution is an action the Secretary of State takes that results in the loss of a business entity’s rights, powers, and authority. In Iowa, the secretary of state may commence a proceeding to administratively dissolve an LLC for several reasons. Most of these reasons relate to not submitting necessary documents or information in a timely fashion.
A limited liability company that has been administratively dissolved continues in existence but may carry on only activities necessary to wind up its activities and liquidate its assets and notify claimants.
An administratively dissolved LLC may apply to the secretary of state for reinstatement at any time after the effective date of dissolution. Before filing for reinstatement, the LLC should solve the issues that resulted in its administrative dissolution. During the process, the secretary of state will consult the department of workforce development, and if there are any remaining delinquencies or liabilities, the LLC will most likely not be reinstated. Once the LLC reinstatement is in effect, it relates back to and takes effect as of the effective date of the administrative dissolution as if dissolution had never occurred.
After an LLC is dissolved and its affairs are wound up, it must file a Statement of Dissolution of a Limited Liability Company with the Iowa Secretary of State. A completed form must contain the name of the LLC and a statement that it is dissolved. The fee for filing a statement of dissolution is $5.
Tax Considerations when dissolving an LLC
Dissolving LLCs should obtain a tax clearance certificate from the Iowa Department of Revenue, as is required of dissolving corporations and LLCs. That said, a dissolving LLC is required to close its tax accounts with the Iowa Department of Revenue. A dissolving LLC in Iowa is required to cancel all of its tax permits and file tax returns through the permit cancellation date. This can be completed online on the State of Iowa’s Department of Revenue website or by completing Iowa’s Business Tax Cancellation form.