How to Dissolve an LLC or Corporation
If you’re going out of business, you’ll need to formally dissolve your business entity. The technical name of this process is called dissolution. It is a natural part of winding down any business entity whether it is a corporation or LLC. Below, you’ll find the step you need to take to dissolve your business entity in any state.
- Complete the Articles of Dissolution
The Articles of Dissolution go by different names depending on which state the articles or certificate is being filed in, but the process is essentially the same in every state. To complete the articles you will the following information: entity name, date of formation, documentation of shareholder/member approval, name and signature of authorized person(s).
- Pay the Filing Fee
To file the Articles of Dissolution, you will have to pay a filing fee. These fees average around $100. For exact fee amounts, see the specific state table of information below.
- Cancel Registered Agent Service
Once you’ve filed the Articles of Dissolution, you’ll want to cancel registered agent service if you’ve hired an agent. Be sure to provide sufficient notice to avoid any surcharges or cancellation penalties with your registered agent. At IncFast, we ask for a 30-day notice before the next year of service begins. Most registered agent services will continue until the end of that year.
- Receive Tax Clearance
In many states, if you’re current on your taxes and annual report fees, the state’s Department of Revenue will send you a tax clearance notice stating that your LLC or corporation owes nothing to the state. You’ll want to keep this document safe in your records!
Why You Should Dissolve a Business
When it’s time to wind down your business or close the doors, the last thing you will want to do is file a form with the state and pay a filing fee. However, if your business is no longer active in a state for any reason, it’s crucial to formally dissolve the entity. Some states may administratively dissolve the company as part of a routine with no consequence to the business owner, but many states do not. In many states, even if a business is not actively engaged in business, if the LLC or corporation hasn’t been dissolved, it will accrue fees and fines for not filing annual reports and paying late fees. These will register as outstanding debts and will be sent to collections. At that point, the business owner’s LLC or corporation would be inactive and the limited liability the entity provided would be null and void, likely leaving the business owner personally responsible for those debts. This could lead to hundreds, if not thousands, of dollars of personal debt.