How to Legally Dissolve a Corporation

“Dissolution” is the act of formally dissolving (closing) a business entity with the state. It involves far more than just stopping to sell products and services. Dissolution is a process for wrapping up all legal and financial aspects of the business and legally terminating its existence in the state(s) where it is registered. Business owners, and professional services providers who offer accounting, tax, or legal services to entrepreneurs, should know how to legally dissolve a Corporation or LLC. Just like life, running a business has its share of ups, downs, and surprises—and there are many different reasons why someone would want to close a business. Here are a few tips to learn how to dissolve a corporation or LLC.


Here is a few tips on dissolving a business entity:

  1. File for dissolution in a state, business owners must file Articles of Dissolution (also called “Certificate of Dissolution) with the Secretary of State office or comparable state agency. Filing Articles of Dissolution will allow you to end your business entity permanently. Before a state dissolves a company, the business must file all outstanding state fees, reports, and taxes. 
  2. In the case of a partnership, business owners must inform the IRS that their partnership is dissolving. When submitting Form 1065 (U.S. Partnership Return of Income), they must check off the box that says it is the final return. They should complete the form by the 15th day of the third month after the tax year ends. 
  3. Before you dissolve a corporation or LLC, it’s important for a business to collect any outstanding accounts receivables and to notify customers that the company will be dissolving. If any contractual obligations remain, a business owner must deal with those. This may require the assistance of an attorney to ensure no loose ends get missed in the process.
  4. It is important to alert creditors, vendors, and other individuals and entities to whom the company owes money. That will allow those parties to identify any outstanding debt the company owes them and ensure it’s resolved before the business closes.

To find out more information on dissolving a business entity give us a call today at (256) 489-1478 or click here to schedule a free 15 minute consultation.