How to Close an LLC or Corporation
A company begins with Articles of Incorporation when it is formed. Therefore it makes sense that Articles must be filed to dissolve a company that has been in operation. Without proper paperwork, the business owner will remain liable for taxes and other state requirements. Fortunately, closing a company is a matter of paperwork.
Business dissolution is primarily an act of filing Articles of Dissolution with your secretary of state. However, if a business is not in a sound position with the state to dissolve, other legal matters may complicate the process.
Steps to Dissolving Your LLC or Corporation
There are three key steps to dissolving a company. We complete these steps on time on your behalf, making an otherwise cumbersome process simple and stress-free.
1. Hold a meeting with the Board of Directors
In this case, you want your meeting minutes to reflect that a vote was taken and an appropriate majority (as outlined in your incorporation papers) was achieved. Those companies with shareholders will want written documentation of this decision signed by all company owners. Some companies, such as single-member LLCs, will not need to complete this step.
2. File the Articles of Dissolution
The paperwork must be completed and signed by us with your company. You will be issued a Certificate of Dissolution that formalizes the termination of business activity in your state. Once dissolution is properly documented, all branches in other states will automatically be dissolved. A Company’s dissolution must occur in the state where incorporation took place.
3. Notify the IRS
This step is important because it will provide you with a "consent to dissolution" or "tax clearance" that makes the process smooth. It will be necessary to pay all federal and state taxes to receive this consent. This document(s) will be required by the secretary of state to achieve a formal dissolution. While we'll help you file your Articles of Dissolution, you will be responsible for contacting the IRS to receive any tax clearances, etc.
An additional step often recommended at this point is closing all credit lines and accounts that pertain to your business. Letting your creditors know that you have dissolved a company will set you up for more favorable circumstances should debt still be present. Finally, if you have any fictitious names in other states, you'll also want to cancel those.
Articles of Dissolution Filings
To file dissolution and properly close your company:
- The owners of the company must approve of the dissolution.
- All taxes, fees, and reports must be updated and filed with the State of formation. Some states require the issuance of a “Tax Clearance” before allowing dissolution to be filed.
- Creditors must be notified, and claims settled complying with state law.
- Assets must be distributed to the owners depending on the % of ownership complying with state law.
- Notify all Federal, State, and Local authorities that the entity will be closing (cancel your FEIN, business licenses, State tax IDs, etc.).
Common questions on filing Dissolution
What are Articles of Distribution exactly?
The articles formalize the cessation of activity as an incorporated entity. They define parameters surrounding the dissolution of a company. This could include the distribution or sale of assets, how shareholders will be compensated, and responsibilities divided among management.
How much will it cost to file Articles of Dissolution?
The state fee varies by state. Our service fee for filing Articles of Dissolution is $149. To review the fee in your state, click the “order now” button and select the state and entity type.
What contingencies would prohibit me from filing dissolution?
The only stipulation that would prohibit the owners of an entity from filing a dissolution is if the company owes outstanding taxes or has annual reports outstanding. In this event, the company would need to bring itself to good standing with the state before filing the dissolution.
How long will it take to have the Articles of Dissolution filed?
The filing time depends on the governing state agency and varies by state.
What will I receive when the Articles of Dissolution are filed?
The governing state agency will return a copy of the filed articles, which are then mailed to the client.