When you no longer intend to operate your business for any reason, it’s important to file the state paperwork to permanently close your company. If that sounds like a waste of time and money, just think about this: Unless you file the paperwork to properly dissolve it, your inactive company will remain an official business entity with the state and you will still be responsible for annual report payments, filing business tax returns and keeping up with any business license or permit costs.
Of course you don’t want to spend time or money on a business you’re not actively involved in. The good news is, you don’t have to. You can properly close your company and officially end its existence by starting with these steps:
- Get approval from all company owners to permanently close the company. For a corporation this may require up to two-thirds of the voting shares or a vote of approval by the Board of Directors if no shares were issued. For an LLC, each state has its own dissolution requirements but generally require a majority of the members’ approval.
- Make sure that all taxes, fees and reports are current with the state. Some states even require that you are issued a “Tax Clearance” before a dissolution can be filed which takes some time.
- File your Articles of Dissolution with the state.
- Pay any outstanding debts to creditors and settle any claims.
- Cancel any permits or business licenses and notify all local, state and federal authorities that the business is closing.
- Distribute assets to the company owners.
As the end of the year approaches, there is no better time to file Articles of Dissolution for a defunct company. The last thing you want after going out of business is to find yourself involved in a messy tax situation from the previous year or still responsible for annual or renewal fees.
We can help you with your state dissolution paperwork and provide a checklist of post-dissolution tasks so you don’t miss a thing. Need to get working on closing your business immediately? Click here.