Voluntary vs. Administrative Dissolution of Your Arizona LLC

I’m often asked by LLC owners who have received a “Notice of Administrative Dissolution” from the Arizona Corporation Commission (ACC) whether they should just allow their company to be dissolved?

Why not to rely on Administrative Dissolution of your Arizona LLC

First off, it is important to understand that a notice of administrative dissolution is not the end of the World for your LLC.  An administratively dissolved LLC can be reinstated under certain circumstances (See A.R.S. 29-786(D)).  If you anticipate starting up business again in the near future, this is the path I usually recommend.

This is because the ACC’s Corporate Filings division is primarily a ministerial body.  In other words, it does not really review or investigate accidental or fraudulent corporate or LLC filings.

For this reason, there is always the possibility that an unscrupulous person could pretend to be you (or one of your LLC members), pay the ACC reinstatement fee and bring your LLC back from the void without your knowledge.

Why should you care?  Although most of us are pretty familiar with personal identity theft, many business owners (especially the owners of inactive businesses) do not pay as much attention to issues of theft with their business identity.

Business identity theft and your inactive LLC

Business identity theft can result from the stealing or unauthorized use of key business identifiers and credentials, as well as the aforementioned manipulation or falsification of your company’s filings and records.

Granted, while not nearly as easy to pull off as it was several decades ago, a person with a stolen business identity could still try and use it to open new business accounts, obtain credit lines in your or your business partner’s names, order and receive goods from suppliers or vendors on credit, and other nefarious activities all at your or your business’ expense.  Given the low filing fee involved in reinstatement, is it really worth taking these risks?

Voluntary Termination of your LLC is also an option

To conclude, if you are pretty sure you won’t be using your Arizona LLC anymore, you should just voluntarily terminate your LLC as soon as possible, rather than leaving it to the administrative dissolution process.

Voluntary termination of your LLC can be accomplished by filling out Articles of Termination for your Arizona LLC and submitting the completed and signed form back to the ACC together with the filing fee.  For those business owners looking for assistance in dissolution matters, our firm has the knowledge and experience to guide you through each step of the process, freeing you up to do whatever else you would rather be doing in your post-LLC chapter in life.

Ben Bhandhusavee is the founding Attorney for BHANDLAW, PLLC, a Phoenix business and technology law firm working with start-up companies, creative intellectual property matters, and complex corporate M&A and technology transactions.  Ben can be reached at (602) 222-5542 or by e-mail at bbhand@bhandlaw.com