Steps to Dissolve a Corporation
There will be a time that some businesses have to close down. Saddening as it may seem, it happens and these days, it happens all too frequently.
However, closing down is not as easy as it seems and there are several entailed steps to dissolve a corporation.
For several business owners, the time will always come that they will have to stop their operations and opt to dissolve their businesses. Aside from being a time full of stresses, there are also several steps to dissolve a corporation. These steps will have to be learned the soonest time possible.
Company owners should approve first the business’ dissolution. For the corporations, shareholders must first approve this action. The corporation’s bylaws basically outline the process’ dissolution and approvals are also needed. To comply with the formalities of the corporation, its directors’ board must draft and grant the dissolving resolution. Shareholders will then take part in an election on the resolution approved by the director. Both of these must be properly documented and recorded in the corporate book.
Certificate of Dissolution: Filing with State
After the shareholders have casted their votes for the said dissolution, paperwork should be filed with the particular state wherein the business was integrated. In case that the corporation qualified for business transaction in the rest of the states, paperwork should be filed in those corresponding states as well.
- Procedure for filing Articles of Dissolution or Certificate of Dissolution is different in every state. Some of the states also call for filing of the documents before the creditors are notified and claims are resolved.
- Particular states also oblige tax clearance for a corporation before filing the Certificate of Dissolution. In cases like these, any of the corporation’s owed back taxes should be settled first.
- Contact an online incorporator, Secretary of State and registered agent’s to get more information.
File the Tax Forms and Notify Creditors
Make sure that even if your corporation is dissolving, your obligations with taxes do not stop. Formalize first all of your obligations and proceed to letting all your creditors that your corporation will already be dissolved.
Settle the Claims and Distribute the Remaining Assets
You can reject or accept the creditor’s claims and the accepted ones should be paid at once. If the claims are rejected, creditors need to be advised in writing that the corporation has rejected the claims. See to it that you have a lawyer to be your guide and adviser. When the claims are paid, make sure that the remaining assets will be distributed proportionally to the company owners as the ownership’s share. All of these distributions should be reported to IRS. In case that your corporation has several stock classes, the corporate bylaws usually outline the process for assets’ distribution to shareholders. To get more details about distribution and the current contingent liabilities, see to it to contact a tax adviser or accountant.