How to Dissolve a Business

How to Dissolve a Business. Termination of a business operation, known as dissolution, requires several steps, and the assistance of a legal or tax professional is often necessary. Of course, you can informally dissolve your company by terminating all business action and leaving the company's "shell" intact, but this leaves you and other owners vulnerable to lawsuits and liability.

Obtain written permission for dissolution from all owners of your company prior to submitting a request for termination with your Secretary of State.

Contact the Secretary of State's office for each state in which your company is authorized to conduct business. Here you will find the forms required to file an official Certificate of Dissolution with each government agency.

Formally notify the Internal Revenue Service and your state's Franchise Tax Board of your company's dissolution.

Pay all taxes due to both the state and federal governments to obtain the "tax clearance" or "consent to dissolution" documents typically required by the Secretary of State's office for formal dissolution of a company.

Cancel all licenses, seller's permits and fictitious name permits with your state and local government to prevent the possibility of confusion or even fraudulent third-party use.

Notify federal and state employment tax agencies of your dissolution. Check the "Final Return" box on state and local tax returns, pay any taxes due, file necessary paperwork and documentation, and close sales tax accounts promptly.

Close all bank, credit and service accounts in the business name.

Notify customers and vendors of your dissolution.

Keep your business records organized and handy for the next several years.


  • Given the potential of tax and legal repercussions for failing to properly dissolve your business, including Class E felony charges for certain tax issues, you should seek the advice of a tax lawyer or accountant.


  • Don't forget to pay all taxes due up to the date of formal dissolution of your company, or you run the risk of prosecution by your state's franchise tax board. If you use one of the many online companies offering business dissolution services, read credentials and agreements carefully to ensure their liability in the event that something goes wrong. Payroll taxes due to the IRS are subject to unlimited liability, even for corporations and LLCs.

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