Dissolve a Corporation with Certificate of Dissolution
After making the difficult decision to dissolve your Delaware corporation, several important steps must be completed to formally close your company. The dissolution process requires careful attention to both corporate governance requirements and regulatory obligations to ensure proper closure.
Corporate Governance Requirements
The dissolution process begins with proper corporate authorization. Your Board of Directors must convene a meeting to pass a resolution authorizing the dissolution of the company. This board resolution serves as the initial corporate authorization for the dissolution process. Following the board's approval, shareholders must also meet to resolve and approve the dissolution. These corporate meetings create the necessary internal authorization before proceeding with external filings and obligations.
Financial and Tax Obligations
Before completing the dissolution, your corporation must satisfy all outstanding financial obligations. This includes filing final tax returns with both state and federal authorities, ensuring all taxes are paid current through the dissolution date. The company's assets must be properly liquidated according to Delaware corporate law and your corporate bylaws. Additionally, all business bank accounts should be closed after ensuring all outstanding checks have cleared and final transactions are complete.
State Filing Requirements
The most critical step in the dissolution process is filing a Certificate of Dissolution with the state of Delaware. Your corporation remains legally active until this certificate is properly filed and approved by the state. The Certificate of Dissolution cannot be completed without first determining your final Delaware Franchise Tax obligation, which requires assessment of your company's assets and activities through the dissolution date.
A filing specialist can provide valuable assistance in calculating the final Franchise Tax assessment, ensuring accuracy in this crucial component of the dissolution process. Once the Certificate of Dissolution is prepared with all required information, an authorized officer of your corporation must sign the document before submission to the state.
The state of Delaware will review, stamp, and approve the Certificate of Dissolution upon filing. Only after receiving this official state approval is your corporation legally dissolved and officially closed.
Alternative Dissolution Method
Some corporation owners prefer to avoid the expense associated with filing a Certificate of Dissolution. Delaware law provides an alternative approach through Registered Agent resignation. When you direct your Registered Agent to file a Certificate of Resignation with the state, Delaware removes the Registered Agent from your corporate record, causing your corporation to fall out of good standing.
A corporation that loses good standing becomes void automatically after thirty days. Once your company is void, your corporation name becomes available in the state's database for other business owners to select. This Registered Agent resignation method also stops the accrual of future Franchise Tax obligations, providing financial relief from ongoing state obligations.
However, this alternative requires active communication with your Registered Agent. Simply ceasing business operations without formally instructing your Registered Agent to resign will result in continued Franchise Tax assessments, late fees, and interest charges. The state will continue sending tax notices and accumulating penalties until proper resignation occurs or formal dissolution is completed.
Professional Assistance
Harvard Business Services, Inc. charges a fee for resigning as your Delaware Registered Agent when you choose this alternative dissolution method. For detailed information about fees, procedures, or questions about either dissolution approach, contact their team directly at Sales@delawareinc.com.
Whether you choose formal dissolution through Certificate of Dissolution or the alternative Registered Agent resignation method, proper completion of the chosen process ensures your corporation is legally closed and prevents ongoing state obligations and penalties.
*Disclaimer*: Harvard Business Services, Inc. is neither a law firm nor an accounting firm and, even in cases where the author is an attorney, or a tax professional, nothing in this article constitutes legal or tax advice. This article provides general commentary on, and analysis of, the subject addressed. We strongly advise that you consult an attorney or tax professional to receive legal or tax guidance tailored to your specific circumstances. Any action taken or not taken based on this article is at your own risk. If an article cites or provides a link to third-party sources or websites, Harvard Business Services, Inc. is not responsible for and makes no representations regarding such source’s content or accuracy. Opinions expressed in this article do not necessarily reflect those of Harvard Business Services, Inc.
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There are 6 comments left for Dissolve a Corporation with Certificate of Dissolution
Filip Hruska said: Monday, March 7, 2016Hello, what is the fee for Closing a Corporation without filing a Certificate of Dissolution and what are the total costs thereof? Thank you very much, Filip Hruska
HBS Staff replied: Tuesday, March 15, 2016Filip, please call our Customer Support team at 1-800-345-2677 during business hours, Monday - Friday, and someone will gladly answer your question.
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