Articles of Dissolution
Filing the Articles of Dissolution is a critical part of the wind-down process for anyone closing a business that is a corporation or an LLC.
Even if you’ve closed your company and you’re no longer operating your business, you still need to process the correct paperwork to legally close your operations. If you have formed a corporation or LLC, have business licenses, and/or pay taxes, the state still sees you as operating and will continue to try to get you to pay fees and taxes.
It’s your responsibility to handle the paperwork that notifies the state business resources that your business is no longer operating. That way, you are no longer required to pay these fees.
Paperwork Needed to Close a Business
Even though every business is different, yours will need to handle at least some of these administrative tasks to ensure that you are no longer on the hook for taxes or permit fees.
1. Dissolve Your Business Structure
Incorporating a business or forming an LLC was important when you started a business. Now it’s important to dissolve your business structure in the appropriate way. First, hold a meeting with your business partners or Board of Directors and ask them vote on closing the business. This vote needs to be officially recorded.
You’ll then need to file your Articles of Dissolution with your state. This document lets your state know that you are no longer operating as a corporation or LLC.
2. File Your Last Tax Return
You don’t need to wait until tax season to pay your final tax return. When you file, make sure to check the “final return” box when filing your tax forms so the IRS knows you won’t be filing future returns. You also need to report shareholder allocations (and losses) for partners on Schedule K-1.
Remember to pay any outstanding taxes, including payroll, sales, and income.
3. Cancel Business Permits and Licenses
Contact each government office where you applied for a business permit and let them know you are no longer operating. Remember: business licenses come from the city, county, and state levels, so don’t miss any of them.
Make sure to take care of all this paperwork before the end of the year to avoid penalties and to prevent the IRS or Secretary of State from sending you additional bills.
Closing a Business FAQ
What happens when a corporation or LLC stops doing business?
In most jurisdictions, a corporation or LLC must pay taxes, file an annual report, or hold a corporate meeting of some kind at least once per year. If a business ceases to exist, Articles of Dissolution and other required documents must be filed with the state office.
What happens if I don’t legally close my business?
Failure to file appropriate documentation may result in taxes, penalties, and other fees for every day the company continues in existence. This applies even if you’ve stopped doing business.
How do I dissolve a corporation or LLC ?
Dissolving a corporation or LLC (Limited Liability Company) requires a legal filing. The “Articles of Dissolution” or “Certificate of Termination” is generally the document that must be filed with the Office of the Secretary of State within the state where the corporation or LLC company is formed.
What if my company is not in good standing or owes back taxes?
Depending on your company’s state of formation, the state will, in most cases, require the company to return to good standing before they allow the company to be dissolved.
Dissolve a Corporation or LLC Including State Fees & Taxes
If you need to close your business, US ProCorp can help you file your Articles of Dissolution.