There are several ways to liquidate an LLC, depending on the reasons and the party initiating the dissolution. It can be initiated either by the LLC members' decision or through bankruptcy initiated by creditors via the court. However, in this discussion, we will focus on the voluntary dissolution of an LLC, namely dissolution by the decision of its members.
How to Start the Liquidation of an LLC?
If you've determined that your business affairs are in poor shape and there's neither the desire nor the capacity to address them, and liquidating the LLC is the chosen course of action, then before convening a general meeting (or drafting a resolution for dissolution if you're the sole member), it's wise to conduct a preliminary internal audit. If there has been no activity over the past three years, that's one scenario, but if there has been activity, it's crucial to gather all the primary documentation, including proof of payments and income receipts:
- Service agreements;
- Acts of service acceptance and transfer;
- Receipts;
- Invoices.
It's advisable to review your bank statement and compare it with each transaction to verify whether you have the aforementioned documents for each one. If everything appears in order, you can proceed with submitting the documents for the LLC dissolution.
How is the Commencement of Company Liquidation Documented?
It begins with a resolution passed at a general meeting and submitted to the state registrar, thus initiating the process. However, when drafting the minutes of the general meeting, several nuances should be considered (or if there's only one participant, it's not a minutes but rather a decision by the participant): it's crucial to specify the reason for liquidation (simply stating "by the owner's decision" is sufficient), appoint a liquidator or a liquidation committee, and establish deadlines for creditor claims. This document must be written on a notarial form, and, of course, signatures must be notarized. A notarized copy can then be submitted to the state registrar. The state registrar records the initiation of liquidation in the unified state register as "in the process of termination." Now the process is officially underway. And that's just the beginning.
What Happens After the Commencement of the LLC Termination Process?
If your business is registered in Kyiv, you'll face a lengthy, almost never-ending queue at the tax authorities to schedule an audit. This is because several years ago, the management of Kyiv city, rather than district tax offices, took over the liquidation process. All cases from various districts were centralized under one management. Chaos ensued from the outset. Then came the 2020 quarantine, followed by another, and then the war... As a result, a multi-year queue was formed just for audit appointments. And even for those who managed to wait, there's no relief. An audit is still an audit.
What Aspects Does the Tax Authority Assess During LLC Liquidation?
Given the tax authority's responsibility for overseeing the calculation of the Unified Social Contribution (USC) for pension insurance, it examines both the USC calculation for employees and tax payments, as well as the submission of reports during the LLC's liquidation. As mentioned earlier, it may also request primary documentation for the past three years. While the tax authority may request documentation beyond this period, penalties can only be applied for violations discovered within the last three years of operation. In essence, all key departments of the State Tax Service will scrutinize your enterprise, even those unrelated to your business. The bypass checklist, now automatically generated and completed, must be signed by over twenty State Tax Service departments. The ultimate objective is to obtain two certificates: one confirming the absence of arrears and the other confirming removal from tax and USC records.
Is It Necessary to Notify the Social Insurance Fund When Liquidating an LLC?
You may come across advice to inform the Social Insurance Fund, also known as the Fund for Social Security, about deregistering your company while liquidating it. However, as of January 1, 2023, this fund has been dissolved, with the majority of its responsibilities transferred to the Pension Fund.
The State Archive and Exclusion from the Unified State Register
All original and registration documents of the company, as well as certificates from the State Tax Service confirming deregistration, must be submitted to the state archive at the place of company registration. If the company was registered in Kyiv, one should apply to the Kyiv city archive. The archive issues the relevant certificate, which should then be submitted to the state registrar. The registrar updates the Unified State Register with the record of the company's termination. This concludes the liquidation process of the LLC. Thus ends the culmination of years of effort.
If you don't want to go through these lengthy processes and quests yourself, you can always turn to our staff. We will find the most optimal option for liquidating your LLC: either alternative or regular liquidation. However, we will handle all communications with government agencies on your behalf, based on a power of attorney.
