What Is Maryland Dissolution?
When a company decides to cease all its business activities, it should go through the process of dissolution. Generally, dissolving a company means that the owners have decided to formalize the closure of the company. It also means that the business entity will deal with all its obligations.
Why Does A Company Dissolve?
Why do companies need to dissolve? – Business entities in Maryland had to file formal paperwork to register their operations with the state. Likewise, the state also requires companies to submit paperwork when they decide to close. This way, the state understands that the company will no longer be liable for any filing and tax requirements.
Who makes the decision to dissolve? – The decision to close an LLC will require the approval of its members. You may apply the unanimous content rule or check your company’s formation documents for rules on the percentage of votes when it comes to dissolution. Meanwhile, the General Corporation Law of Maryland allows voluntary dissolution using any of the two methods:
- The board of directors takes action, and the shareholders vote on the resolution.
- The company secured written consent from all shareholders.
How long does it take to dissolve a business? – The time frame to finish the whole process is not guaranteed. It may take a few weeks or months, depending on how long the company handles all the necessary steps. As for the state, its processing time may also vary depending on their workload. The typical processing time with the Maryland Secretary of State is at least 8 weeks.
What Happens If Your Company Does Not Formally Dissolve?
Failure to dissolve 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. If your company does not comply with the required filings, the state will list it as not in good standing and apply penalties.
Steps To Dissolve Your Business
To dissolve a business entity in Maryland, your company has to follow the process that the state has set.
1. File Articles of Dissolution with the state – A Maryland LLC has to file Articles of Cancellation, while a corporation has to submit Articles of Dissolution with the State Department of Assessments and Taxation. You may submit by mail, fax, or in person. You may also draft your Articles of Cancellation or Dissolution if you want.
2. 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.
3. Give notice to any claimants – Inform all known claimants about the company’s dissolution. Give them information as to where and until when they can submit their claims. You may also choose to publish in a newspaper to inform other unknown claimants. Corporations must mail a notice to known creditors at least 20 days before they file the Articles of Dissolution.
4. Tax clearance – The state does not require business entities to obtain tax clearance. However, you have to make sure that your company has current property returns and that it does not owe the Department of Assessments and Taxation any penalty fees. You may contact their office to verify this. You should also state in the IRS Form that it will be the company’s final return.
5. Close all bank accounts, credit lines, permits, and licenses – Your business bank accounts remain active while you are winding up your company so it can settle obligations. After that, you may close all business bank accounts. You should also cancel other permits and licenses to protect your reputation and finances.
How DoMyLLC can assist with streamlining the process
The dissolution process in Maryland includes multiple steps. These can be stressful and overwhelming, especially for people who have never done it before. If your company has decided to close its operations in Maryland, our team of experts can guide you through the process. We also provide personalized solutions. Contact us now and find out how your company can benefit from our services.
Maryland Dissolution FAQs
Is There A Filing Fee To Dissolve The Business?
The filing fee for normal processing is $100. An additional $50 applies to expedite the process. Additionally, credit card users will also have to pay a 3% processing fee.
Do You Need The Department Of Revenue Clearance Before The Secretary Of State Will Accept Your Dissolution?
No, you do not have to secure clearance.
How Long Does The State Take To Process The Dissolution?
The State Department of Assessments and Taxation takes at least 8 weeks to process a document. However, you will probably receive the confirmation after at least 10 weeks. The state treats all mailed documents normally unless the cover letter and envelope states that the company is requesting expedited service. In-person submissions fall under expedited service, so you should prepare payment for the additional fee. As for fax filings, the state automatically expedites the processing. The expedited service will take approximately 7-10 business days.
When Can Another Business Use Your Company Name?
Your business name will immediately be available for use after the dissolution.