Dissolving Your Corporation: Needs to be done Right!
The time has come for you to dissolve your Concord, NC, corporation we know dissolving your corporation is not easy. Maybe you’re retiring, maybe you’re closing a business that’s not profitable, or maybe you created a corporation and you find you don’t need it any longer. Whatever your reasons may be, the fact remains that you have to properly dissolve the corporation lest you run into a loose end that turns into a knot. Working with a Charlotte, NC, business accountant helps you prevent knots as you wind down the operation and close out the books.
Shareholders and Members Need to Agree Upon the Action
Shareholders and members need to agree to dissolve the corporation. A one or two-member board can write up an agreement to dissolve and call it binding. However, if there are multiple members or shareholders, they need to be contacted, given the agreement, sign off on it, and return it to the business. A CPA can help in both cases by making sure a self-written agreement is correct and will hold up and keeping track of the shareholders/members and their agreements to dissolve.
Filing the Articles of Dissolution With the State of North Carolina
In order to dissolve a North Carolina corporation, the company has to file the correct form for Articles of Dissolution because there’s more than one form. The standard form used for this purpose is B-06, but if there are outstanding shares and no outstanding debts, the corporation has to use form B-05. It’s not a straightforward process and a Charlotte, NC, business accountant can help you determine which form is the right one to use.
The articles of dissolution are filed with the North Carolina Secretary of State. The form lays out the details of the corporation and the date that the dissolution is effective. The effective date is something that you can decide upon or you can discuss it with a business CPA and determine if there’s an optimal effective date.
Filing Federal Forms
You still have to take care of business taxes even though you’re closing. That means informing the IRS that the corporation is being dissolved and business operations are ceasing. All outstanding taxes need to be paid and the IRS has to be told that this is a final payment in some cases. The IRS has a list of forms that are required for closing a business, but only some of them may be applicable to the corporation. If you’re not sure what forms you need, consult with a CPA to determine which ones are necessary and which ones aren’t.
Notify Creditors of the Closing
All outstanding debts need to be settled when the corporation is dissolved to avoid further collection activity. This can be done by paying off the balances during the dissolution process and informing the creditor that the business is closing. Or the creditors can be notified by mail with a letter that explains the corporation is dissolving and outlying how the creditors can get their claims resolved. The creditors are allowed 120 days to make a claim or be disbarred from collection if the claim isn’t made within that time. Taking the route of notifying creditors they have 120 days to make a claim or be disbarred is allowed by North Carolina state law, but it’s best to discuss this option with a business accountant to determine if it’s the right one to take.
Dissolving a corporation is more than shutting the doors and turning out the lights. Doing it properly requires filling out the right forms, including the correct information, and submitting it to the appropriate office or division. The goal is to make sure that nothing remains open that should be closed, and that the state and federal governments know that all filing activity from the corporation is to cease. A Charlotte, NC, business accountant helps you make sure that there’s nothing left undone and the business is officially closed.