A Guide to Dissolving Your LLC or Corporation

“Dissolution” refers to the official cancellation of a business entity’s legal existence, which can happen either involuntarily or voluntarily. The involuntary dissolution of an LLC or corporation usually occurs when the business fails to meet its obligations to the state (such as not filing annual reports, not paying state taxes, and so on), and so the office of the secretary of state dissolves the company without its consent (called “administrative dissolution”).

Voluntary dissolution is an action taken intentionally by an LLC’s members or a corporation’s shareholders when they vote to cease operations. It is the first step in the process toward truly closing a business.

Why Is It Important to Formally Dissolve My Business?

Dissolution is a critical part of closing your business because it reduces the individual liability of your business’s members or shareholders. Failure to properly dissolve can leave those with a stake in the business exposed to creditors, lawsuits, ongoing state filing requirements and penalties, franchise taxes, and even the possibility of corporate identity theft.

If your business has already shut down but you neglected to formally dissolve it, check out the following article from Northwest to learn how to correct this oversight (and why it matters): “I Stopped Operating My Business Years Ago But Never Formally Dissolved It… Now What?”

Just as you filed Articles of Incorporation with the state to create your corporation or Articles of Organization to form your LLC, you must file dissolution paperwork in your home state to formally close your LLC or corporation. This paperwork is usually called Articles of Dissolution for corporations and a Certificate of Dissolution for LLCs.

In most states, your dissolution filing will require the following information:

• The name of your LLC or corporation
• The date of your company’s organization or incorporation
• A statement to the effect that your company is formally dissolving
• A statement indicating the event leading to the company’s dissolution (usually a company vote or an event—such as an LLC owner’s death—in the company’s operating agreement or bylaws that requires the company to cease operations)
• The effective date of the dissolution

After you complete your Certificate of Dissolution or Articles of Dissolution, you’ll need to submit the document to the state agency in charge of regulating businesses (usually the office of the secretary of state) and pay the state filing fee. Since the forms and filing fees vary from state, we included links to state-by-state requirements at the bottom of this page.

Not what you’re looking for? Looking to form a new LLC or incorporate your business instead? Check out Northwest’s guides on how to form an LLC or how to incorporate your business. 

Formally dissolving an LLC or corporation is really only the first step to closing your business down. After your members or shareholders vote to dissolve the company and you submit the required state paperwork, you’ll still need be required to complete several steps.

Though each business’s situation will be slightly different, you can expect to do the following (at the least):

• Notify your company’s creditors (by mail) that the company has or will dissolve & work toward settling your company’s debts.
• Notify the IRS of your company’s dissolution and pay your business’s federal, state, and local taxes. The IRS website provides a helpful Closing a Business Checklist that lists the steps you’ll need to complete (including fulfilling your wage obligations to your employees).
• Liquidate your company’s remaining assets (after taxes and company debts are paid).
• Make any final distributions to members or shareholders based on their ownership share or percentage of ownership in the company.

Most LLCs and corporations outline the dissolution process in their LLC operating agreements or corporate bylaws. In general, it’s important that all members and shareholders understand how the dissolution process works, what they are entitled to when the business has shut down completely, and what their legal obligations are.

Below you’ll learn how to dissolve your limited liability company or corporation in any state. Choose your entity and click on the state name for detailed information on dissolving your corporation or LLC.

State specific information on dissolving an LLC:

State specific information on dissolving a corporation: