To formally dissolve an organization, dissolution documents must be filed in compliance with the Secretary of State's Offices of where the entity was formed. Also, requirements regarding outstanding Franchise Tax balances must be met. We offer complete dissolution services for $99 plus any state fees.
There are certain common steps involved in dissolving an organization. The following six steps are involved in the dissolution.
- Director action. All the directors must agree on the situation and what will follow after the organization is wound down to dissolve a company.
- Filing the articles of dissolution: The paperwork and other necessary documents need to be produced to the state once the decision is finalized. If you have foreign qualified your organization to other states, those states also need to be informed and submitted. To resolve claims by notifying the creditors is considered necessary before filing a dissolution certificate in many states. Many states prefer to have clear tax records before the filing is done.
- Filing of federal, state, and local tax forms: Even after stopping production in your business, your tax obligations don't stop instantly. The documents regarding the closing of the company should be submitted to the IRS and the state and local tax agencies. In the case of employees, reporting the payroll may be compulsory to safeguard their interests.
- Informing the creditors: You must disclose all your creditors regarding the dissolution of the organization. Also include your mailing address for their convenience, as they may want to make a claim on the assets of the organization. After issuing notice, usually, the claim should arrive within 120 days. Sometimes notice in the local newspapers is legally sufficient.
- Handling the creditors' claims: After the creditors make their claims, it is at the organization's discretion either to accept or reject the claims. If accepted, the company should take the necessary steps to pay the claimants or look for a way of settling the claim. The creditor may agree upon a percentage of the original claim amounts if the whole amount isn't forthcoming. However, if you reject the claim, you must inform the creditor in writing.
- Distribution of remaining assets: For a regular entity, the remaining assets are distributed to the members or shareholders as stated in the articles or bylaws. If the organization had 501(c)3 status, the remaining assets need to be distributed to other 501(c)3 organizations or to the federal government.