In 2023, there were over 691,000 small businesses in the state of Colorado. While that’s an impressive number, sadly, not all are successful. Some may even be abandoned, and the owners have moved on to something newer and better.
Are you perhaps one of these entrepreneurs who have fallen out of love with your original business? Then you might be wondering what the next steps to take are.
Keep reading if you want to know how to dissolve an LLC in Colorado. We’ll give you clear instructions to follow so you can proceed with confidence.
Get Unanimous Consent From the LLC Members
If you’re in a single-member LLC, then this should be very easy. But if there are other LLC owners, then you’ll probably have to hold a vote to dissolve the company. Not only that, but the votes typically have to be unanimous too.
To make sure, check your LLC’s operating agreement. This should detail what triggers a dissolution and exactly what the members have to do to make it go through. Regardless, you should take thorough notes and document everything thoroughly in case you require this information later on.
File the Final Tax Return for Your Company
The advantage when you dissolve an LLC in Colorado is that you don’t have to get tax clearance before doing so. However, that doesn’t mean you should ignore your tax obligations.
Before you dissolve your LLC, you should file the final tax return for it. You’ll need either Form 1120 or Form 1120-S, depending on what tax structure your company has. Don’t forget to check “final return” on the form either.
File the Articles of Dissolution
To actually dissolve your company after taking care of business, you’ll file the Articles of Dissolution for Colorado. This is done online through the Secretary of State’s website, and the information you’ll need for this is:
- Principal office street address
- Principal office mailing address (optional)
The ID number, entity name, and jurisdiction will already be pre-filled, and you can’t change this data. Also, you have the opportunity to add additional information, which you can attach as either plain text or PDFs. The filing will cost $25 to do, and it’ll be processed immediately.
When you’re on the webpage, click on “Businesses, trademarks, trade names.” On the next page, click “Search business database.” Here, you’ll enter your LLC’s 11-digit ID number or name, then hit “Search.”
After the site’s generated results, click on your company. Select “File a form,” then “Dissolve or withdraw” on the “Documents available for filing” page. You should check that all the information is correct, click “Pay now,” and then complete the process when you see the confirmation page.
Notify All Necessary Parties
The next step is to notify all necessary parties, starting with any creditors or lenders. Do note that you should’ve informed your registered agent of the dissolution before filing. That way, they’re prepared to receive documents on your behalf regarding the dissolution.
On top of that, you must settle all outstanding debts and obligations. This must be done before proceeding to the distribution of assets (we’ll cover this in the next section).
Other parties you should contact include vendors and suppliers. Settle any invoices you have with them too.
Of course, you should also notify your employees if you have any. You’ll have to settle any final payroll issues, such as giving out final paychecks and filing final employment tax returns.
Cancel Permits and Licenses
To avoid any liabilities in the future, you should cancel all permits and licenses. Ending registrations can help too, as you won’t need them anymore.
This is also the time to terminate leases and agreements with other parties. In addition, close business accounts and cancel any lines of credit associated with the LLC.
Distribute the Assets
After you’ve settled your debts, there are probably assets and profits still left in your LLC.
If this is the case, you need to distribute them amongst the LLC owners. Check your operating agreement to see how exactly to do this.
If your company doesn’t have one, or it doesn’t specify how to distribute assets after dissolution, you’ll have to either follow Colorado state law or distribute according to each owner’s stake. It can be a good idea to consult with a lawyer to ensure everything’s done correctly.
At this point, you can set up another LLC if you wish. It’s wise to use our business registration service since it’s easy, affordable, and fast.
Maintain and Keep Records
As we’ve mentioned earlier, you should take detailed notes regarding dissolving your Colorado LLC.
Not only that, but you should keep all records for a few years after the dissolution has officially gone through. These can be vital in settling legal issues, claims, audits, or tax filings.
Involuntary Dissolutions
The above sections are written in regard to voluntary dissolutions. But what happens if you’re dealing with an involuntary one? This usually happens due to a failure to be compliant; you can be administratively or judicially dissolved.
An administrative dissolution happens if you ignore your periodic reports or if you don’t have a registered agent. There are no penalties, but if you want to return your LLC to good standing, you’ll have to pay $100 for the Statement Curing Delinquency.
That’s How to Dissolve an LLC in Colorado
It may be sad to end a company you’ve invested so much time, money, and energy into. But there comes a time where you must close a chapter and start a new one.
Knowing how to dissolve an LLC in Colorado can be a real time saver, and it’ll also prevent huge headaches surrounding the process. As a result, it’ll pave the way to newer and brighter opportunities.
Sign up with Business Anywhere if you’d like assistance creating a new LLC. We can be your registered agent too. You can even set up a virtual mailbox with us for added convenience.
