When you reach the decision to dissolve your corporation, you will find that the specifics of this procedure vary from state to state, and the steps you take will be based on the way in which your business is structured. At the same time, there are some common factors you will need to deal with, in order to make the process official and stay within the law.
Here are some steps you will need to take as part of the process:
- The board of directors must adopt a resolution to dissolve the corporation, and a majority of the shareholders have to approve it as well.
- Many states require a corporation to file a “Statement of Intent to Dissolve” before the process can be initiated. All creditors should be paid at that time, and they should also be notified that the dissolution is pending.
- “Articles of Dissolution” must be filed with the secretary of state, and after the dissolution is approved the remaining assets of the corporation can then be distributed to the shareholders.
- Within 30 days, Form 966 must be filed with the Internal Revenue Service.
In some states, tax clearance is required, and the corporation must acquire a statement or certificate from the appropriate taxing authority, indicating that the corporation has no further tax liability, before the process of dissolution can proceed. It is also obliged to provide its creditors and claimants with a detailed notification of the anticipated corporate dissolution. After all pending claims have been handled properly, the corporation may distribute its remaining assets to the shareholders, and those distributions must be reported for tax purposes.
Since there may be unknown creditors when the dissolution takes place, the corporation is also obliged to inform them of what is taking place. This is usually done with a notice placed in a newspaper that is published where the corporate headquarters is located, or in the state where the dissolution is being processed.
“How to Dissolve a Corporation.” <em>AllBusiness.com. </em>N.p., n.d. Web. 21 Dec. 2009. www.allbusiness.com/business-planning/business-structures-corporations-exiting/3839298-1.html
“Small Business Administration – Choose a Structure.” <em>Small Business Administration.</em> N.p., n.d. Web. 16 Feb. 2010. <http://www.sba.gov/smallbusinessplanner/start/chooseastructure/START_FORMS_OWNERSHIP