The state-approved LLC formation when business owners in Pennsylvania filed their requests. Likewise, these businesses will also have to file formal paperwork to formalize the LLC’s closure, so the state will know that the company isn’t in operation anymore and have no more obligations to pay taxes or update business records.
There are many reasons why an LLC business and its members may decide to cease operations, but there is only ONE right way how to dissolve an LLC in PA. If you’re lost and have no idea how to formally dissolve an LLC and you want to do the process by yourself, read up and follow this 8-step guide. In addition, check out our general guide to dissolving your LLC and look at our trusted LLC formation services reviews if you are just getting started.
6 Steps in Dissolving a Pennsylvania LLC
Unlike forming the LLC by submitting just a form and documents attached, there are several important tasks to complete first before filing for dissolution (the end of your business operations).
1. Vote and Record a resolution to Dissolve the Pennsylvania LLC
A limited liability company cannot be closed simply because you (the business owner) want to. You must hold a meeting with the other LLC members and vote for/against a dissolution. Make sure the resolution to dissolve your Pennsylvania LLC is recorded via meeting minutes.
In most cases, an LLC will have an operating agreement readily available, since this document is prepared at the beginning of an LLC’s formation. It indicates the business name, business operation details, names of LLC members, distribution of assets, and so on. The operating agreement should also include steps on how to file LLC dissolution.
If your LLC does not have an operating agreement in place, seek legal advice because your LLC may likely have to follow state rules instead. If you prefer not to lawyer up, do check out Pennsylvania’s LLC Act to be informed about tax regulations, dissolution process, and other information relevant to dissolve your LLC properly.
2. Close all LLC bank accounts and local permits
Once all (or majority) of the LLC members voted for the dissolution of your business entity, you should then do the following:
- Close business bank accounts under the name of the Pennsylvania LLC
- Cancel all business licenses and permits you obtained for the LLC in Pennsylvania
3. Pay Taxes and Get Tax Clearance from the Pennsylvania Department of Revenue
Pay all taxes and administrative fees owed by your LLC in Pennsylvania. If you are not sure what kind of taxes your business has to close or settle, call the Customer Experience Center at 717-783-8434 to ensure you’ll meet all liabilities and filing requirements that the PA Department of Revenue needs from you.
Depending on what kind of business your LLC held, you may have to take care of several types of taxes, such as:
- Sales tax
- Corporation tax
- Employer withholding tax
- and so on
Make sure when closing the tax accounts, you tick off the box as “final.”
Obtaining Tax Clearance Certificates
In Florida, you must obtain a Tax Clearance Certificate to dissolve your LLC properly. To do this,
- complete the REV-181 Application for Tax Clearance Certificate
- file appropriate tax reports/returns, and pay off all taxes, interest, and penalties.
The Department of Revenue and the PA Department of Labor and Industry need four weeks to deliver the tax clearance certificate after receiving your application.
Once you obtain the Tax Clearance Certificates from the State of Pennsylvania Department of Labor and Industry, you can then continue with the dissolution process.
4. Clear up any LLC debt and Distribute Assets
Unlike other states, the State of Pennsylvania doesn’t require LLCs to publish or notify creditors about the upcoming LLC dissolution. However, you do have to settle any debt or financial obligations from third-party suppliers, creditors, and other individuals/businesses that may submit claims in the future. Because it is possible to NOT know all claimants, you can publish a notification (complete with all the information about dissolution, the deadline to submit claims, where to submit claims, and so on). If it was published in a newspaper, keep a copy filed. This could serve as evidence in the future if someone or another business makes a claim against your dissolved Pennsylvania LLC.
Once all debt is paid, assets can now be distributed among LLC members (based on the terms listed in the operating agreement).
5. Pick a Dissolution Process
An LLC may choose from three slightly-different routes of dissolution. Any of these options would have to pass through the Pennsylvania Department of State and are required to attach the Tax Clearance Certificate.
Certificate of Dissolution
- Use this if you still have to wind up some business obligations
You can dissolve your LLC in Pennsylvania WHILE finishing off some business affairs. Use the Certificate of Dissolution (Domestic Limited Liability Company) form and fill it out with your details, including LLC name, registered office address, name of registered agent, date of dissolution, return address, and signature of LLC representative.
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Certificate of Termination
- Use this if you completed all business obligations and want to dissolve your LLC asap.
File the Certificate of Termination form via the Pennsylvania Department of State to end the existence of your LLC immediately after filing the documents. You’ll need to fill out the following details:
- LLC business name
- A statement indicating that your LLC’s debts, taxes, and other financial obligations are paid off
- Name and address of the registered agent
- A statement indicating that your LLC is not facing any lawsuit or pending court actions
- Signature and date of filing
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Voluntary Termination Form
- Use this if your LLC never transacted business in Pennsylvania
The Voluntary Termination form is a simple document that includes your LLC name, signatures of the majority of your LLC members, the name and address of the LLC’s registered agent, and a statement promising that all liabilities have been discharged.
How Much Does it Cost to Dissolve Your LLC in Pennsylvania?
To dissolve your PA LLC, you need to pay a $70 filing fee, regardless of the method you choose above.
The Commonwealth of Pennsylvania accepts the Certificate of Dissolution, Certificate of Termination, or Voluntary Termination Form online. But if you prefer to send it by mail, or drop it off in person, copy this address:
- Pennsylvania Department of State
- Bureau of Corporations and Charitable Organizations
- P.O. Box 8722
- Harrisburg, PA 17105-8722
The Department of Revenue usually takes about four weeks to return a tax clearance certificate by mail. You then need to wait for the Department of State to process your LLC dissolution for another 7 to 10 business days.
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If you’re in a hurry, go there in person and opt for expedited service. Note that this comes at an additional fee:
- $100 for same-day service for $100
- $300 for three-hour service
- $1,000 for one-hour service
6. Wind Up Your Affairs
“Winding Up” refers to a group of tasks that should be completed for proper LLC dissolution. LLCs need this phase to legally close a business and could range from tasks like selling all assets, terminating contracts, negotiating debts, issuing final paychecks of employees, and other last-minute obligations.
This is done as the last step because some obligations, such as selling real estate owned by the LLC, could take months or years to process.
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The LLC managers should handle the winding up unless the LLC operating agreement assigns someone else for specific tasks (for example a real estate agent for selling properties owned by the LLC). If there are no managers, winding up will be handled by LLC members or a person approved by the members.
Out-of-State or Foreign Registrations
If your LLC was registered or qualified to do business in other states or foreign countries, you are required to file separate forms and have your right to conduct business in those states dissolved as well.
You must check with each state or country. The dissolution document varies by name (it can be called the termination of registration, certificate of termination of existence, application of withdrawal, or certificate of surrender of right to transact business), so take precaution in taking the proper steps.
If you’ve successfully dissolved your LLC in PA, but failed to file additional dissolution forms, your business would still be charged for annual report fees and minimum business taxes. And if you fail to pay these liabilities, the fees would eventually add up and you’d be in a bigger hole than you originally were.
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When you dissolve a Pennsylvania LLC, you as a business owner will never have to be liable for any outstanding debts, claims, or liabilities of your LLC. Going through the dissolution process voluntarily (by following the methods above) is always better than involuntary dissolution (or when the courts or Pennsylvania state initiate the dissolving of your LLC due to failed payments, lawsuits, or other reasons.
Do note that once your dissolution is processed, the name of your limited liability company can now be used by someone else and operate like a regular business. This is why dissolving an LLC is only recommended if you no longer intend to conduct further business in the state of Pennsylvania.