What are Articles of Dissolution?
Articles of Dissolution are formal documents filed with the state government to officially dissolve a
business entity. This process is crucial for ensuring that the business is legally and properly closed, which helps to avoid future liabilities and legal complications.
Legal Compliance: Ensures that you comply with state laws and regulations regarding business closure.
Liability Protection: Protects the owners from future liabilities and legal actions related to the business.
Tax Obligations: Helps to settle any remaining tax obligations and prevents future tax issues.
When Should You File Articles of Dissolution?
Articles of Dissolution should be filed when the owners of a business decide to permanently close the business. This decision can arise from various factors such as
financial difficulties, retirement, or strategic repositioning. It’s advisable to file these documents after all debts have been settled and assets have been distributed.
Steps to File Articles of Dissolution
The process of filing Articles of Dissolution typically includes the following steps: Board Resolution: Obtain a resolution from the board of directors or members agreeing to dissolve the business.
Settle Debts: Ensure all debts and liabilities are settled, and all remaining assets are distributed among the owners.
Complete the Form: Fill out the Articles of Dissolution form, which can usually be found on the state government’s website.
Filing Fee: Pay the required filing fee to the state.
Submission: Submit the completed form and fee to the appropriate state agency, typically the Secretary of State.
Consequences of Not Filing Articles of Dissolution
Failing to file Articles of Dissolution can have several negative consequences: Ongoing Tax Liabilities: The business may continue to incur tax liabilities, penalties, and interest.
Legal Actions: The owners may remain personally liable for any future legal actions or claims against the business.
Credit Issues: Unresolved debts and obligations can negatively impact the owners' credit scores.
Can Articles of Dissolution be Revoked?
In some states, it is possible to revoke Articles of Dissolution if the owners decide to continue the business. This process usually requires filing a revocation form within a specific period and may involve additional fees. It’s essential to check the specific regulations of your state regarding this matter.
Conclusion
Filing Articles of Dissolution is a crucial step in the lifecycle of a business. It ensures legal compliance, protects the owners from future liabilities, and helps close any outstanding tax obligations. If you are considering closing your business, it’s advisable to consult with a
business consultant or legal professional to guide you through the process effectively.