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A company may reach point in time where it has to be dissolved; It could be for one reason or several reasons. For example: The company could no longer be successful, or the shareholders wishes to pull their assets out, (a form of exiting).
A dissolution, will holt all necessary tax filings and other obligations that comes with operating and filing with the secretary of state.
As an entrepreneur, you put your heart and sweat into building your own business; then having to dissolve it, is one of the most emotional decision you’ll ever have to make.
An Article of Formation or Article of Incorporation is filled with the Secretary of State, when creating an LLC or a corporation, to begin operations of a company; hence the opposite, an Article of Dissolution, must be filed with Secretary of State (SOF) to legally cease the operations of a company.
YWithout filing an Article of Dissolution, the business owner will continue to be liable for taxes and other state obligations. Fortunately, closing a company is not that difficult, it’s really a matter of filing the paperwork.
However, if a business is not in good standing with the state, before having to be dissolved, it may complicate the process and other legal matters.
The company must be in good standing with the state of incorporation and cannot be in arrears of any state franchise taxes or annual reporting requirements. If the entity is not in good standing, a reinstatement is required in order to not encounter any complications with proceeding with the dissolution.
Let’s go over the three key steps to dissolving a company.
Step 1.
Hold a meeting with the Board of Directors, and record the minutes of the meeting to reflect that a vote was taken and that there’s a majority vote to dissolve the company. (it needs to be documented in your incorporation papers). Some companies, such as single-member LLCs will not need to complete this step. However, companies with shareholders will need to have written documentation signed by each shareholder.
Step 2.
File the Articles of Dissolution
Your Registered Agent must complete and sign the paperwork for your company and file it with the Secretary of State for where your company was formed. Your SOS process the paperwork and issues a Certificate of Dissolution that formalizes the termination of your business activity in within its jurisdiction. The issuance of the dissolution document, will automatically trigger all other states where your business had been qualified to operate in, to also automatically be dissolve as well.
Step 3.
Notify the IRS
Upon notifying the IRS, you will have to pay all federal and state taxes due at this time to receive a "tax clearance" or "consent to dissolution" - which is necessary for the IRS to no longer require the company to pay taxes. The document(s) must be submitted to the formation state, Secretary of State to finalize the dissolution.
While your Registered Agent helps you with filing your Articles of Dissolution, you or your accountant will be responsible for contacting the IRS to receive any tax clearances.
Next, is to cancel all DBA names which exist in other states. Finally, closing all credit lines and accounts that pertain to your business, is highly recommended.
RCA will prepare and file the dissolution paperwork, notify the IRS and formalize all necessary terminations, then close any DBA’s that may exist in other states.
Rest easy, knowing that our team is hard at work for you.
