corporate-law incorporation
Does dissolving your LLC imply it was a sham company and therefore confer liability to you as the sole member?
<p>I've done work for a former startup client in another state (AZ) for a few years and that work has come to an end. All that contracting work was done under my LLC (in DE) specifically created for that project, but now that it no longer has any revenue from anyone in that state, its probably time to dissolve it.</p>
<p>The former client wants to prevent me from doing my work in any other state (separate issue), but regarding the matter of dissolving my corp he claims that I am personally still bound by all conditions of the Agreement with his corp and mine and that dissolving my corp now would show it &quot;was a sham corporation from the outset and that you were operating under the false guise of a legitimate [company]&quot;.</p>
<p>From having been around construction I noted that some builders have a separate LLC for each house they build, even if its in a larger development project of a community of homes -- and that project itself is a separate parent company. At some point after the house sells and the warranty expires, the builder dissolves the LLC. Are these builders doing something unethical? I thought the whole point of using a project scoped corp was to more easily put the project behind you at some point and move on with other business. Am I missing something?</p>

<h2>An <a href="https://en.m.wikipedia.org/wiki/Limited_liability_company" rel="nofollow noreferrer">LLC</a> isn’t a <a href="https://en.m.wikipedia.org/wiki/Corporation" rel="nofollow noreferrer">corporation</a> to start with</h2>
<p>So it can hardly be a sham corporation, can it?</p>
<p>An LLC is a hybrid structure with some of the features of a corporation and some of the features of a partnership/sole trader. One of the features it shares with a corporation is that it is a legal person so, unless the contracts it entered explicitly bound you, they don’t bind you.</p>
<p>Get your own legal advice but winding up an LLC once it has served its purpose <strong>and</strong> it has no liabilities (including possibly contingent liabilities) is just business.</p>
