Skip to main content
Find a Lawyer
Please enter a legal issue and/or a location
Begin typing to search, use arrow keys to navigate, use enter to select

Find a Lawyer

More Options

Closing a Business: Basics of Corporate Dissolution

By Caleb Groos | Last updated on

Many small businesses are grappling with the tough decision of whether to shut down or try to weather the economic storm. For those that must close their doors, there still remains the often laborious task of shutting down the business. What they must do depends on the type of legal entity utilized by the business, along with where they are. In the case of businesses that incorporated, shutting down involves dissolving the corporation. Here are some basics about how a corporation dissolves.

In order to dissolve a corporation, the corporation's owners must agree to dissolve the entity by following either the procedures set out in the organizational documents for the corporation (such as its articles of incorporation or bylaws), or the rules set out in the state's business statutes. Usually, these rules require at least a majority of the owners to agree on dissolution, but they could require a two-third's or even unanimous vote.

The corporation must then be officially dissolved with state and local government offices. Thus should be taken care of quickly because afterward, the coporation will not be liable for business taxes or filings in the state going forward, and creditors are put on notice that the corporation can no longer incur business debts. Dissolution forms are filed with the state corporations unit, usually a division of the Secretary of State. Each state's specific requirements and procedures for dissolving a corporate entity must be followed.

Other things to think about when dissolving a corporation include canceling permits, licenses, and fictitious business names, and paying off any taxes and debts. Creditors, employees and customers should also be notified of the dissolution.

Was this helpful?

Response sent, thank you

You Don’t Have To Solve This on Your Own – Get a Lawyer’s Help

Meeting with a lawyer can help you understand your options and how to best protect your rights. Visit our attorney directory to find a lawyer near you who can help.

Or contact an attorney near you:
Copied to clipboard