Alabama Dissolution
Not all companies can last forever, and there may come a time when one has to say goodbye to the business one has built. The whole ordeal of closing your business is sad and stressful. But one must end all business operations properly to avoid facing possible problems in the future, which means completing Alabama dissolution.
What Is Alabama Dissolution?
When a business entity decides to end its operations, it should undergo the process of Alabama dissolution. Dissolving a company means that the owners will close a business formally and deal with all responsibilities and obligations.
Why Does A Company Dissolve?
Why do companies need to dissolve? – Simply closing one’s business is not enough to dissolve the company formally. The state requires you to file paperwork when you started your business. Likewise, your company will have to submit formal Alabama dissolution paperwork to close it. It is to inform the state that your company is no longer in business and that it will no longer be liable to pay annual fees and business taxes.
Who makes the decision to dissolve? – LLCs need the approval of the members. On the other hand, the board of directors of a corporation has to draft and approve a resolution. After this, the shareholders will vote on it. All actions must be part of the corporate record book.
How long does it take to dissolve a business? – Usually, it takes around three to four weeks to complete the whole process. However, this is not guaranteed. It will depend on how long one takes to complete all the necessary steps. The time frame for the state to process your company’s Articles of Dissolution may also vary depending on their workload.
What Happens If Your Company Does Not Formally Dissolve?
Failure to formally receive Alabama dissolution for your company means it will continue to exist. Your company will continue to be liable for filings, taxes, and all corporate acts in the past. Thus, you will remain vulnerable to possible penalties and claims against the company.
Steps For Alabama Dissolution
To dissolve a business, your company will have to go through the process that Alabama has set.
- File Certificate of Dissolution with the state – After finalizing your company’s decision to dissolve, you will have to deal with the paperwork. File an original and two copies of the completed Domestic Limited Liability Company or Domestic Business Corporation Articles of Dissolution with the Judge of Probate in the county where the Certificate of Formation of your company is.
- Remove all liabilities and obligations – Liquidate all assets and settle all obligations according to the priorities that the law has outlined. Then, distribute all remaining properties if there are any.
- Give notice to any claimants – You must notify the company’s creditors and explain that you have filed for Alabama dissolution and that they can submit claims until the set deadline, which is usually 120 days from the notice date. You should also inform them of changes in the mailing address and provide other claim-related information.
- Tax clearance – Alabama does not require companies to obtain tax clearance before dissolving. However, you need to take care of your federal taxes. On your company’s income tax return, check the box indicating that the document will be the final return.
- Close all bank accounts, credit lines, permits, and licenses – Your business bank accounts remain active while you are winding up your company. You can use the funds to settle obligations and pay for associated costs. However, you will not be able to use the accounts for a new business. So, it will be best to close them down. You should also cancel other permits and licenses to protect your reputation and finances.
How DoMyLLC can assist with streamlining the process
The multi-step process that one needs to follow when closing down a business can overwhelm a business owner. With all the paperwork and other obligations, you may find yourself needing help from a professional. So, leave the filing and handling of the process to us. Our services include personalized solutions and live support from a team of experts. Contact us now and find out how we can make your Alabama dissolution hassle-free.
Alabama Dissolution FAQs
Is There A Filing Fee To Dissolve The Business?
There is a $100 filing fee. Your company will also have to verify the recording fee with the Judge of Probate, which is at least $50. Make sure you use two separate checks for the payments.
Do You Need The Department Of Revenue Clearance Before The Secretary Of State Will Accept Your Dissolution?
There is no need for you to secure a clearance from the Department of Revenue.
How Long Does The State Take To Process The Dissolution?
The time frame for the overall processing of dissolution depends on the workload of the Secretary of State, but it usually takes them a week. The judge has to determine if your company’s Articles of Dissolution conforms to the law. Then, they will record and certify two copies. They will send one copy to your company. For LLCs, this certified copy will serve as the Certificate of Dissolution. As for corporations, the certified copy will come with a Certificate of Dissolution.
The judge will send the second copy along with your filing fee to the Secretary of State within ten days of recording. The Secretary of State office will index the filing and post information on your company’s dissolution on their official website.
When Can Another Business Use Your Company Name?
The state allows a company to revoke its Articles of Dissolution within 120 days. After that period, the state will consider the dissolution permanent. Thus, other businesses will be able to use the company name.