What order are payments made in a dissolution?

Under the typical statutory and operating-agreement waterfall, creditors are paid first, including members who are creditors, then wind-up and liquidation costs, then members receive liquidating distributions according to their positive capital-account balances. This tool follows that order.

Why distribute by capital account rather than ownership percentage?

Most operating agreements and the default LLC rules liquidate according to positive capital-account balances, which reflect each member's contributions, allocated profits and losses, and prior distributions. Ownership percentage alone can misstate what each member is actually owed at wind-up.

What happens if liabilities exceed asset proceeds?

Then there is nothing left to distribute and members may face capital calls or, depending on the entity and guarantees, personal exposure to the extent of any deficits. The tool shows a zero distribution and flags the shortfall so you can plan for it.

Does this handle a deficit capital account?

This calculator distributes positive remaining cash by positive capital balances. A member with a deficit capital account may owe a restoration depending on the operating agreement; that is a legal determination outside this estimate. Enter only positive balances for the distribution split.

Is this a substitute for legal or tax advice?

No. Dissolution involves state filings, creditor notice, tax clearance, and final K-1s. Use this tool to model the cash split, then have a business attorney and accountant finalise the wind-up.

What is the LLC Dissolution Asset Distribution Calculator?

Subtracts wind-up costs and outstanding liabilities from liquidated asset proceeds, then distributes remaining cash to members by capital-account balance. Business attorneys and accountants use it when winding up an LLC. It runs free in your browser on Gera Tools, with nothing uploaded.

LLC Dissolution Asset Distribution Calculator

Name: LLC Dissolution Asset Distribution Calculator
Creator: Gera Tools
License: https://creativecommons.org/licenses/by/4.0/

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Winding up an LLC means paying everyone in the right order. This calculator applies the standard liquidation waterfall: liquidated asset proceeds first satisfy creditors and the costs of winding up, and only the remainder is distributed to members in proportion to their capital-account balances.

The dissolution waterfall

LLC dissolution follows a legally defined priority order. The calculator applies this sequence automatically:

Secured creditors — claims with collateral are satisfied first
Unsecured creditors — trade payables, loans without security
Members who are creditors — any loans a member made to the LLC
Wind-up and liquidation costs — legal fees, filing fees, trustee fees, broker commissions
Members — positive capital-account balances — remaining cash distributed here

Only amounts left after steps 1 through 4 reach the members in step 5.

How it works

The distributable pool and each member’s share are computed as:

distributable = max(0, proceeds - liabilities - windup costs)
member share  = distributable x (member capital / total positive capital)

If proceeds do not cover liabilities and costs, the distributable pool is zero and the tool reports the shortfall rather than a negative distribution. Members are split strictly by their positive capital-account balances, which is the default rule in most operating agreements.

Worked example

For example, an LLC liquidates assets for 500,000, owes 180,000 in liabilities, and incurs 20,000 in wind-up costs, leaving 300,000 distributable. Three members hold capital accounts of 150,000, 100,000, and 50,000 (total positive capital 300,000). Their distributions are:

Member A: 300,000 × (150,000 / 300,000) = 150,000
Member B: 300,000 × (100,000 / 300,000) = 100,000
Member C: 300,000 × (50,000 / 300,000) = 50,000

The split mirrors the capital accounts exactly in this case because the distributable amount equals total capital. When the distributable amount is smaller, each member receives a proportional haircut.

What this calculator does not cover

This models the cash split only. Dissolution also requires: filing articles of dissolution with the state, sending creditor notice (some states require a formal notice period), obtaining tax clearance, filing a final tax return with Schedule K-1s for each member, and cancelling business licenses and EINs. Have a business attorney and accountant involved in the process.

Practical checklist for LLC dissolution

Beyond the financial distribution, a full dissolution involves several procedural steps that vary by state:

Vote to dissolve — members vote to approve dissolution per the operating agreement, and the decision is documented in meeting minutes or a written consent
File articles of dissolution — submitted to the state where the LLC was formed; most states charge a small filing fee
Notify creditors — some states require formal written notice with a claim deadline; this is distinct from simply paying the bills
Tax clearance — many states require a tax clearance certificate before the dissolution is recognized; file final state and federal returns first
Cancel licenses and registrations — business licenses, DBA registrations, employer accounts with the state, and the EIN with the IRS

The capital distribution calculation here gives you the financial picture; the procedural steps above are what legally completes the wind-up.