What Is District Of Columbia Dissolution?
When your company decides to cease its activities, you will have to let the state know through the process of dissolution. Dissolving your company means that you will formalize its closure and deal with all its obligations.
Why Does A Company Dissolve?
Why do companies need to dissolve? – When you formed your company, you had to undergo a process that the state required. Likewise, your company should also submit the proper paperwork to formalize its closure. This way, the state will be aware that your company will no longer do business and not be liable to pay business taxes and other fees.
Who makes the decision to dissolve? – The decision to complete District Of Columbia dissolution for an LLC will require approval of the members. For corporations, the company needs its board of directors to draft and approve a resolution to dissolve. Then, the shareholders will vote on the dissolution.
How long does it take to dissolve a business? – How the company deals with all the necessary steps will highly affect the time it will take to complete the process. Once your company accomplishes all initial actions, you can expect the Department of Consumer and Regulatory Affairs to take 15 business days to process your company’s dissolution. You may also have to wait longer if you mail the documents. It may take some time before it reaches the state.
What Happens If Your Company Does Not Formally Dissolve?
Failure to dissolve your company with the District of Columbia Department of Consumer and Regulatory Affairs means that it will remain responsible for all recurring fees and penalties. The state will still consider your business active. Thus, it will expect you to continue filing reports and paying taxes.
Steps To Dissolve Your Business
There are steps you need to follow to dissolve your business.
1. File Articles of Dissolution with the state – LLCs in the District of Columbia will have to use Form DLC-7 Statement of Dissolution for Domestic Limited Liability Company. The state also allows you to draft your own articles.
On the other hand, there are 2 forms available for corporations. If your corporation was actively engaged in business, use Form DBU-7 Articles of Dissolution for Domestic For-Profit Corporation. If it has not conducted business yet or issued any shares, use Form DBU-8 Articles of Dissolution by Incorporators for Domestic For-Profit Corporation.
You should file all forms with the Department of Consumer and Regulatory Affairs by mail or in person. LLC filings do not need original signatures, while corporate filings do. If you want to expedite the processing time, you may include Form EX-1 Expedited Service Action.
2. Remove all liabilities and obligations – Make sure to liquidate all the assets of the company and settle all its obligations. Follow the priorities based on the outline the law has set. After that, distribute all remaining assets to the right people.
3. Give notice to any claimants – You may send a written notice to all known claimants and creditors. Explain to them that the company has filed for dissolution. You should also notify them as to where and until when they can submit their claims.
4. Tax clearance – The District of Columbia does not require business entities to secure a tax clearance before dissolving. However, make sure you take care of all the final taxes due to avoid encountering problems in the future.
5. Close all bank accounts, credit lines, permits, and licenses – Bank accounts under the name of your company will remain active during the winding up process. Allocate the business funds to the settling of all payments due and other obligations. After this, you can close them since you will not be able to use them for other businesses. Additionally, you should also cancel other permits and licenses.
How DoMyLLC can assist with streamlining the process
The District of Columbia dissolution process requires multiple steps and paperwork. If you find it a bit overwhelming, you may need help from professionals. You can rely on our team of experts. We offer personalized solutions that will cater to your company’s needs. Contact us now and find out how we can help in the dissolution of your business entity in the District of Columbia.
District of Columbia Dissolution FAQs
Is There A Filing Fee To Dissolve The Business?
The filing fee is $220 to dissolve a Corporation or LLC. Expedited filing requires an additional $50 for a three-day service and $100 for one-day processing.
Do You Need The Department Of Revenue Clearance Before The Secretary Of State Will Accept Your Dissolution?
No, your company will not have to secure clearance.
How Long Does The State Take To Process The Dissolution?
The normal processing time for mailed documents is about 15 business days. If you choose the expedited service, you can expect your company’s documents within 1 or 3 days. The agency will expedite all walk-in filings.
When Can Another Business Use Your Company Name?
The District of Columbia does not offer name protection. Thus, your company name will be available as soon as it dissolves.