Why Proper Dissolution Matters
Many business owners simply stop operating and assume their company will close itself. This is a mistake.
If you do not formally dissolve your business, the state still considers it active. That means:
Step-by-Step Dissolution Process
Vote to dissolve
For LLCs, members must agree to dissolve (check your Operating Agreement for the required vote). For Corporations, the board of directors and shareholders must both approve the dissolution.
File a Certificate of Dissolution
File Articles of Dissolution (LLC) or Certificate of Dissolution (Corporation) with the Secretary of State. There is usually a filing fee. Find your state's filing portal in our state directory.
Notify creditors and settle debts
Inform all creditors that your business is closing. Pay off outstanding debts and close any credit accounts. Some states require you to publish a notice in a local newspaper.
Cancel licenses and permits
Cancel business licenses, DBA registrations, and any permits. This stops future renewal fees and obligations.
File final tax returns
File your final federal and state tax returns. Mark them as "final" returns. Pay any outstanding tax obligations. Close your EIN account with the IRS by sending a letter.
Distribute remaining assets
After all debts are paid, distribute any remaining assets to members (LLC) or shareholders (Corporation) according to your operating agreement or bylaws.
Close bank accounts
Close all business bank accounts after all final transactions have cleared.
Cancel your registered agent
Once the dissolution is complete and your filing is approved, you can cancel your registered agent service. Keep records for at least 7 years.
Dissolution vs Administrative Dissolution
Voluntary Dissolution
You choose to close the business. You control the process and handle everything properly. This is the recommended approach.
Administrative Dissolution
The state closes your business because you failed to file reports, maintain a registered agent, or pay fees. This comes with penalties and makes reinstatement expensive.