Closing a Bank Account for a Dissolved LLC

Why Closing the Account Matters

If you leave the account open, the bank may continue to charge monthly maintenance fees, and you may still be liable for taxes or reports. An open account can also suggest the LLC is still active, complicating your dissolution.

Closing the account protects you from unauthorized transactions and ensures that any remaining funds are properly distributed to members. It also provides a clean record for your final tax filings.

• Avoid ongoing fees and potential overdrafts.
• Prevent identity theft or fraud on the account.
• Simplify your final accounting and tax reporting.

Before You Start: Gather Required Documents

Banks require proof that the LLC is dissolved and that you have authority to close the account. Typically, you will need a copy of the articles of dissolution filed with your state, the LLC's EIN confirmation, and a resolution from the members authorizing closure.

You will also need personal identification for the person closing the account, such as a driver's license or passport. If the LLC has multiple members, the bank may require signatures from all of them or a notarized statement of consent.

• Articles of dissolution (certified copy if required).
• EIN confirmation letter from the IRS.
• Operating agreement (to show who has authority).
• Bank's own account closure form (if any).

Steps to Close the Account

Contact your bank to learn their specific procedures. Some banks allow closure over the phone or online, but many require an in-person visit or a written request. Ask about any fees for closing and how to transfer or withdraw remaining funds.

If you have a positive balance, decide how to distribute it: either write a check to the LLC and then deposit it into a member's account, or request a wire transfer. Make sure to follow your operating agreement's distribution rules.

After the account is closed, request written confirmation from the bank. Keep this document for your records, as you may need it for tax filings or to prove the account is closed.

• Check for any outstanding checks or pending transactions and clear them.
• Cancel any linked debit cards or online banking access.
• Notify any vendors or clients who may auto-pay from the account.

Handling Outstanding Checks and Automatic Payments

Before closing, review your recent statements for any checks that haven't cleared or recurring payments. If you close the account with pending items, they will bounce, causing fees for both you and the payee.

You can either wait for checks to clear or contact the payees to reissue payments. For automatic payments, switch them to a different account or cancel them well in advance. Give yourself at least a month to ensure everything has cleared.

• List all pending checks and deposits.
• Update any recurring payments with new account details.
• Notify the bank of any expected deposits after closure.

State-Specific Considerations

State rules vary on how long you must keep business records after dissolution. Some states require you to maintain records for a certain number of years, even if the bank account is closed. Check your state's requirements for record retention.

In some states, you may be required to publish a notice of dissolution in a local newspaper. This is separate from closing the bank account, but it's a good reminder to complete all dissolution formalities to avoid future liability.

• Review your state's LLC dissolution checklist.
• Keep copies of all dissolution documents and bank closure confirmation.
• Consult a professional if you're unsure about state-specific rules.

Common Pitfalls to Avoid

One common mistake is leaving a small balance in the account to avoid closure fees, only to be charged monthly maintenance fees that drain the balance. Another is forgetting to cancel recurring subscriptions, leading to overdraft fees.

Also, do not assume that closing the bank account automatically dissolves the LLC. You must file the articles of dissolution with the state separately. Closing the account is just one step in the wind-up process.

• Don't leave a zero balance without confirming the account is closed.
• Don't forget to cancel any business credit cards linked to the account.
• Don't ignore state filing requirements for dissolution.