Running an LLC may have been a profitable endeavor for you, but now you are considering the dissolution of your company in favor of new business opportunities. However, you also know your business still owes money to other companies, which may complicate your plans.
An LLC can shield you from personal liability, so you should not have to worry that your business debts will come out of your personal funds. However, your business assets are a different matter. Chron explains that you should make an effort to pay your debt before dissolving your LLC.
Notifying creditors
As an LLC owner in Texas, the law requires you to send a notice that you intend to dissolve your business to any creditor you know of. Your notice should also provide a deadline for your creditor to send a claim, as well as an address for creditors to send their claims to.
Paying the claims
You have the right to verify creditor claims to make sure you actually owe them money. If so, you will pay the claims off with your LLC cash or by selling off business assets. You and any co-owners should receive the remainder of the business assets once you have settled the claims.
Dealing with outstanding debts
It is possible your LLC will owe more money than it can pay even if you sell your business assets. Negotiating with your creditors for a smaller settlement could be an option. If this does not work out, you might see if you can close out your LLC and walk away from any remaining debts.
Dissolving a business with debt is not something to take likely. Following proper legal steps might help you avoid a court date with creditors.
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