How to Dissolve an LLC in Alabama: Complete 2026 Guide

How to Form an LLC: Step-by-Step

1. 1

   Vote to Dissolve

   Start with your operating agreement, because whatever it says about dissolution controls. It normally sets the percentage of membership interests or the number of members required to approve winding up, and it may also require notice of the meeting or a specific form of written consent. If your agreement is silent on dissolution, the safe course is written consent from every member rather than a guess at a default threshold, since a dissolution approved by too few members can be challenged after the fact. Record the outcome in a written resolution before anyone starts cancelling contracts or moving money.

   Pro tip: Write the resolution on the day of the vote, not weeks later. It should name the LLC exactly as it appears on the state record, state the effective date of dissolution, and carry the signature of every consenting member.
2. 2

   File Articles of Dissolution (Domestic Limited Liability Company) with the Alabama Secretary of State

   Alabama's Articles of Dissolution (Domestic Limited Liability Company) go to the Alabama Secretary of State with a $100 processing fee. The current form, revised January 2022, gives you two routes. You can mail or courier two copies of the signed form, or you can complete the filing online, which the Secretary of State describes as taking roughly the time it takes to type the request. The office does not accept this form by email. Alabama does not publish a standard turnaround, so treat processing time as variable and confirm the status rather than assuming a date. Forms and filing links are at https://www.sos.alabama.gov/node/1412.

   Pro tip: If you pay by check, make sure the account is funded. Alabama charges a $30 dishonored-check fee, and that is a penalty on top of the $100 filing fee, not part of it.
3. 3

   Notify Creditors and Settle Debts

   Alabama's procedure for known claims against a dissolved LLC uses a notice period of 120 days. That is the figure the statute names, and the practical reading is to give every known creditor written notice and to allow the full 120 days rather than compressing it. Write to everyone the LLC could owe: lenders, landlords, suppliers, subcontractors, and any professional on a retainer. If you reject a claim, the claimant has 90 days from the rejection to pursue it, so keep the rejection letter and the proof of delivery together. Pay legitimate debts, or reserve funds for them, before any money reaches the members.

   Pro tip: Send creditor notices by a method that produces a delivery record. If a creditor later argues that no notice ever arrived, the receipt is what settles the question.
4. 4

   Close Alabama State Tax Accounts

   Alabama does not require a tax clearance certificate to dissolve an LLC. The Secretary of State will accept and process your Articles of Dissolution without one, so ignore any service that sells clearance as a mandatory gate on the filing. What you genuinely owe is the paperwork, and one piece of it is conditional. For tax years beginning on or after 1 January 2024, an entity whose Alabama Business Privilege Tax computes to $100 or less is exempt from the tax and is not required to file the return, which is where most closing LLCs land. Work out the LLC's figure before assuming a final Business Privilege Tax return is due, and file it with the Alabama Department of Revenue only if the computed tax exceeds $100. Separately, close any other state tax registrations the LLC holds, such as sales tax or income tax withholding, and mark each return you do file as a final return so the account stops expecting filings from an entity that no longer trades.

   Pro tip: Filing a final return and closing the account are two separate actions. Do only the first and the registration stays open, which is how owners of dissolved LLCs end up with non-filing notices a year later.
5. 5

   Deactivate Your EIN with the IRS

   The IRS cannot cancel an EIN, but it can deactivate it once any outstanding returns are filed and taxes owed are paid. See the FAQ below for the letter and mailing addresses. File the final federal return first: Form 1065 for a multi-member LLC taxed as a partnership, or a corporate return (Form 1120 or 1120-S) if the LLC elected corporate treatment, each with the final return box checked, or the owner's return for a single-member LLC that never elected corporate treatment.

   Pro tip: Send the deactivation letter after the final return has been filed, not before.
6. 6

   Distribute Remaining Assets to Members

   Members are paid last. Follow the order set out in your operating agreement, and where it is silent the sequence runs creditors first, then anything owed to a member acting as a creditor such as a documented member loan, then the members' remaining interests. In most Alabama LLCs that final tier tracks each member's ownership percentage unless the operating agreement splits distributions on some other basis. Do not distribute while a creditor claim is still live inside the 120-day notice period. A distribution paid over an unpaid debt is the quickest route to a member being pursued personally for money the LLC owed.

   Pro tip: Value non-cash assets before you hand them over. A vehicle, a domain name, or a piece of equipment transferred at an invented figure creates a tax problem for the member who receives it.
7. 7

   Confirm Dissolution is Complete

   Submitting the form is not the finish line. Check the Alabama Secretary of State's business entity search until the record reflects the dissolution, and keep the confirmed copy the office returns to you. Then build one file that holds the filed Articles of Dissolution, the dissolution resolution and member consents, the creditor notices with their delivery receipts, the final federal and Alabama returns, and the schedule showing what each member received. Those documents are what answer a question from a bank, a former creditor, or a tax examiner two years from now, long after everyone's memory of the details has faded.

   Pro tip: Take a dated screenshot of the dissolved status in the state's entity search. It costs nothing, it is available immediately, and it is often all a bank needs to close the business account.

Winding-Up Checklist

• Cancel all Alabama business licenses and permits

  Alabama business licensing runs through counties and municipalities as well as state boards, so cancel each one with the office that issued it. A license left open simply renews, and the renewal invoice arrives for a business that no longer exists.

• Close business bank accounts

  Close the LLC's accounts only after the last creditor payment has cleared and member distributions are complete. Ask for written confirmation of closure and keep the final statement with your dissolution file.

• Cancel business insurance policies

  Give each carrier the dissolution date and ask for cancellation effective then. Unearned premium is often refundable, and a claims-made policy may need tail coverage if you want protection for work the LLC already performed.

• Notify vendors, suppliers, and customers in writing

  Write to every open account with the dissolution date, instructions for final invoices, and where to send them. Auto-renewing software, freight, and marketing contracts are the ones that keep billing long after the doors close.

• File final payroll tax returns and W-2s (if you had employees)

  File the final federal payroll returns along with your final Alabama withholding and unemployment filings, then issue W-2s to everyone who worked for the LLC during the year. Close the payroll registrations too, because a final return on its own does not shut them.

• Retain business records per Alabama retention requirements

  Alabama does not publish one retention period that covers every document, so keep the core set: formation documents, the operating agreement, the filed Articles of Dissolution, tax returns, and the financial records behind them. Many owners keep the dissolution file permanently, since it is the proof the LLC closed properly.