What Is North Carolina Dissolution?
When it is time for your company to end its operations, you’ll have to undergo the process of dissolution. Properly dissolving your company will inform the state that it’ll no longer have to file reports and pay taxes.
Why Does A Company Dissolve?
Why do companies need to dissolve? – When your company originally registered in North Carolina, it had to undergo a process and file the necessary documents. North Carolina requires business entities to do the same when they decide to close. Your company has to submit paperwork with the state.
Who makes the decision to dissolve? – LLC members need to agree to dissolve. Meanwhile, corporations should hold a shareholder vote on a resolution that the board of directors has adopted.
How long does it take to dissolve a business? – It may take weeks for your company to complete the whole process. However, the time may vary depending on how long it takes to complete all necessary tasks. Once you have filed the documents, give the state 7-10 days to process them.
What Happens If Your Company Does Not Formally Dissolve?
Deciding to close your business does mean it will have no more obligations. Your company will still be registered with the state until dissolution is filed. Thus, your company will have to submit annual reports and pay taxes. Failure to comply will result in late fees.
Steps To Dissolve Your Business
Follow these steps to ensure that you properly and formally dissolve your North Carolina business.
1. File Certificate of Cancellation or Dissolution with the state – North Carolina LLCs have to submit Form L-07 Articles of Dissolution of Limited Liability Company, and corporations have to fill out Form B-06 Articles of Dissolution by Board of Directors and Shareholders, Business Corporation. However, if your corporation has not issued shares and has no unpaid debts, it has to file Form B-05 Articles of Dissolution Prior to issuance of Shares, Business Corporation. File the appropriate form with the Corporations Division of the Secretary of State by mail, online or in person. Your company may also prepare your own Articles of Dissolution, instead of using the state forms.
2. Remove all liabilities and obligations – Under state law, business entities in North Carolina need to do winding up tasks. These include the following:
- collection of assets
- disposal of properties that the company cannot distribute in kind
- remove of liabilities or making provisions to pay them
- distribution of remaining assets
3. Give notice to any claimants – This step is an optional task. However, it will limit your liability and allow the safe distribution of assets. You can send a written notice to all known claimants or publish it in a newspaper. Make sure the notice includes information on where and until when they can send claims. The deadline must not be less than 120 days from the date the written notice took effect.
4. Tax clearance – North Carolina does not require business entities to obtain tax clearance before dissolution. However, you should check the final return box on the company’s IRS form for federal tax purposes.
5. Close all bank accounts, credit lines, permits, and licenses – Use the funds of the company to settle all its obligations. Then, close the accounts under the company name. You can also add protection to your finances and reputation by canceling all the permits and licenses of your company.
How DoMyLLC can assist with streamlining the process
Closing your company in North Carolina requires you to go through the dissolution process. If you need help, you can rely on our team of experts. We also provide personalized solutions fit for your company’s needs. Contact us now and find out how you can benefit from our services.
North Carolina Dissolution FAQs
Is There A Filing Fee To Dissolve The Business?
The filing fee for the dissolution is $30. You can request same-day processing of your documents if you submit before noon and pay an additional fee of $200. If you choose the 24-hour expedited processing service, you have to pay an additional $100 fee.
Do You Need The Department Of Revenue Clearance Before The Secretary Of State Will Accept Your Dissolution?
No, North Carolina does not require business entities to obtain tax clearance before dissolution.
How Long Does The State Take To Process The Dissolution?
The state will take around 7-10 business days to process documents filed for normal processing. If you have filed online, you can expect the state to finish processing your document within 3-5 business days. Expedited processing will depend on the option you choose.
When Can Another Business Use Your Company Name?
North Carolina implements name protection. Thus, your company name will be safe for 120 days after the date the dissolution takes effect. After this, other entities can use it.