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How to Dissolve a Corporation

Dissolve a Corporation

You cannot dissolve a corporation by simply ceasing all business activities. As much as we wish that the process was this simple, it’s really not. Instead, you’re required to go through a well structured process to legally close your corporation for good. In this article, we’ll run you through some of the basic steps you must follow to dissolve a corporation.

How to Close a Corporation

To close a corporation, you must file articles of dissolution with your concerned authority. This document brings legal closure to your business. Without this document, you cannot dissolve your business. Even when you cease all business activities, close the building down and move to a different state, the state authorities will continue to regard your business as active. This means that you’ll still be liable to pay your taxes, or be subjected to penalties for not paying your dues on time.

To ensure that none of these situations arise, you must follow the steps stated below.

5 Steps to Dissolve a Corporation

The following steps have outlined the complete process of dissolving a corporation.

Step 1: Call a Board Meeting

To begin the process of dissolution, you must call for a board meeting of all directors and shareholders. The vote of approval by a majority of the board will then decide the future of the corporation. Once it is approved by the body, another round of voting must ensue with the shareholders.

Every state has different guidelines and specifications in terms of how the voting should take place. So it is crucial that you consult with your state authorities before starting the voting process. Also consult the articles of incorporation or bylaws that might state special requirements for the dissolution process.

The minutes of the meeting should be recorded and stored safely with all other records of the corporation.

Step 2: File a Certificate of Dissolution With the Secretary of State

After confirming the dissolution of the organization with your board and shareholders, you can go on to file the articles of dissolution with the secretary of state.

While the article of incorporation is the document you must file to get your corporation legally established, an article of dissolution does the exact opposite. This article, when approved, legally dismissed your corporation of its status as an active business.

Let’s not forget that if your business is set up in multiple states, you’ll be required to file the articles of dissolution for all these states. The official authority might go by the name of incorporation bureau, corporation agency or corporation commission.

Different states might also have different guidelines, paperwork or documents required while filing for dissolution. They may require you to file in person, via mail or online.

Therefore, it’s crucial to be well informed about the state’s guidelines where you are conducting business.

Step 3: Notify the Internal Revenue Services (IRS)

After filing for the dissolution, you must clear up any taxes and other dues left to be paid. You can start by notifying the IRS about your corporate dissolution and liquidation with Form 966. Then you can go on to file the final tax return and specify that this is the last tax return you’ll be filing as the corporation.

Depending on the type of corporation you have, you’ll be required to file different tax return forms. To find the right one, visit the IRS website and download the forms depending on your business.

You can now start paying all the taxes related to the employees, such as the federal employment tax, income tax, social security, unemployment and Medicare.

Depending on the state you operate in, you may have to get a tax clearance certificate before you can file for dissolution.

Step 4: Notify Claimants

As you notify the state authorities, you must also send a notice to your creditors about the dissolution. This notice allows creditors to make claims for any debts you might owe them for a certain period. Creditors cannot make any claims after the allotted period is over. It is your responsibility to provide your creditors with genuine information, such as sending them the notice timely, specifying the address to which they should send their claims, and the information they must include.

You must also notify all your suppliers and customers about the closing of your business.

Step 5: Close Accounts and Cancel Licenses

You can end the dissolution process by finally closing the commercial bank accounts, service accounts or credit lines. You can terminate all permits and licenses related to your corporation. This process must be undertaken in every state where you’re conducting business under the corporation.

After the process is done and dusted, all taxes are paid off and claims by creditors are settled, you can liquidate and distribute the assets amongst the shareholders. It’s crucial to remember that doing so without paying off all debts can make all the shareholders personally liable to pay the debts.


Once you’ve finally dissolved the corporation, your business is no longer active. If you want to set up a new corporation or any other form of business, you’ll have to file the articles of incorporation with the secretary of state all over again.

While all the steps have been clearly explained in the article, following through with them can be tough. Any error in these steps can lead to unnecessary delays in the process and an additional penalty in some cases. Getting professional help in such a case can be a smart decision.


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