1- Board Resolution:
The board of directors must pass a resolution recommending the dissolution of the corporation. This resolution typically requires a majority vote from the board.
2- Shareholder Approval
Shareholders may need to vote on the resolution to dissolve the corporation. The specific voting requirements may be outlined in the corporation's bylaws or state laws.
3- File Articles of Dissolution
Prepare and file Articles of Dissolution with the appropriate state agency. This document officially informs the state that the corporation is ceasing its business activities. The required form and filing fees vary by jurisdiction.
4- Notify Creditors and Settle Debts
Notify creditors and settle outstanding debts. The corporation should pay off its creditors and resolve any outstanding obligations.
5- Liquidate Assets
Liquidate the corporation's assets. This may involve selling assets and distributing the proceeds to shareholders or using them to settle outstanding debts.
6- Tax Filings
File final federal, state, and local tax returns for the corporation. This includes filing Form 966 with the IRS, which notifies them of the corporation's dissolution.
7- Cancel Business Licenses and Permits
Cancel or transfer any business licenses and permits held by the corporation.
8- Close Bank Accounts
Close the corporation's bank accounts and resolve any financial matters.
9- Notify Employees and Clients
Inform employees and clients about the dissolution. Address employment matters, such as providing final paychecks and complying with labor laws.
10- Distribute Remaining Assets
After settling debts and liabilities, distribute any remaining assets to shareholders in accordance with their ownership interests.
11- File Final Reports
In some jurisdictions, corporations may be required to file final reports or notifications with the state regulatory authorities.
12- Maintain Records
Maintain records of the dissolution process, including meeting minutes, resolutions, and filed documents, for future reference.