What Is Tennessee Dissolution?
Dissolution is the process of informing the state about your company’s intention to cease all its business activities. It also removes the company’s liability on filing and tax obligations formally.
Why Does A Company Dissolve?
Why do companies need to dissolve? – When you created your company in Tennessee, you needed the approval of the Secretary of State. Likewise, you will also have to submit formal paperwork to inform the state about your company’s intention.
Who makes the decision to dissolve? – Check the company’s formation documents for provisions about dissolution. Generally, members of an LLC decide. Meanwhile, corporations will depend on the board of directors and shareholders. There are also cases when the state administration dissolves a company.
How long does it take to dissolve a business? – The time a business entity in Tennessee has to spend on the process will depend on how long it takes to complete each step. Give the state 3-5 business days to process the documents. The whole ordeal may take weeks to finish.
What Happens If Your Company Does Not Formally Dissolve?
Companies that do not dissolve formally continue to exist. Thus, your company will have to comply with the requirements of the state for active businesses. Additionally, the company will remain liable for all its corporate acts in the past.
Steps To Dissolve Your Business
To dissolve your business in Tennessee, your company should follow the multiple steps.
1. File Articles of Dissolution with the state – Tennessee has various dissolution documents. File the appropriate form with the Division of Business Services of the Department of State by mail or in person. You can download the forms through the website of the Department of State. The state also allows companies to draft their articles of dissolution or termination.
LLC
- If your LLC did not accept any contributions, use Form SS-4244 Articles of Termination by the Organizers.
- If your company has accepted contributions, use Form SS-4246 Notice of Dissolution – Limited Liability Company. It also needs to file Form SS-4245 Articles of Termination after filing the first form and winding up the business.
- In certain cases, the state administration dissolves a company. If this is the case, your company has to use Form 4243 Articles of Termination Following Administrative Dissolution.
Corporation
- If the company has not conducted business or issued shares yet, file Form SS-4423 Articles of Dissolution and Termination by Incorporators or Directors.
- Otherwise, file Form SS-4255 Written Consent to Dissolution and Form SS-4410 Articles of Dissolution. After filing the said documents, your company has to file Form SS-4256 Written Consent to Termination and Form SS-4412 Articles of Termination of Corporate Existence.
- If you are trying to terminate a corporation that the state has already dissolved, use Form SS-4414 Articles of Termination Following Administrative Dissolution or Revocation.
2. Remove all liabilities and obligations – Liquidate the assets of the company and settle all its obligations. If there are remaining assets, distribute them to members or shareholders.
3. Give notice to any claimants – You may send a written notice, which includes information about where and until when they can submit claims. You may also publish a notice in a newspaper. This way, your company will be able to notify even unknown claimants.
4. Tax clearance – The state does not require companies to obtain tax clearance when dissolving. However, you have to make sure that your company no longer has remaining tax obligations. Your company has to notify the Department of Revenue about the closure. For corporations, the Division of Business Services will request for the tax clearance for the company. You also have to clarify in the company’s IRS form that it will be the final return. It will be for federal tax purposes.
5. Close all bank accounts, credit lines, permits, and licenses – Close all business bank accounts to avoid legal problems in the future. Then, cancel all business licenses and permits to prevent fiscal obligations and protect your reputation.
How DoMyLLC can assist with streamlining the process
Following each step when closing a business can be a bit overwhelming. Our team of experts is ready to assist you with the Tennessee dissolution process. We also provide personalized solutions. Contact us now and get the service that will address the needs of your Tennessee company.
Tennessee Dissolution FAQs
Is There A Filing Fee To Dissolve The Business?
The filing fee when dissolving a company in Tennessee depends on the document. The rates are as follows:
- Notice of Dissolution – $20
- Articles of Termination – $20
- Articles of Termination by Organizers – $20
- Articles of Termination Following Administrative Dissolution – $20
- Articles of Dissolution – $20
- Articles of Termination – $20
Articles of Termination Following Administrative Dissolution – $20
Do You Need The Department Of Revenue Clearance Before The Secretary Of State Will Accept Your Dissolution?
LLCs do not need to secure tax clearance. For corporations, the Division of Business Services will make the request. This clearance will serve as verification that the corporation filed all reports and paid taxes and penalties properly. If the Division of Business Services fail to acquire the clearance verification from the Tennessee Department of Revenue, the dissolution documents of the corporation will be rejected and returned to the company.
How Long Does The State Take To Process The Dissolution?
The state normally takes about 3-5 business days to process mailed documents. If your company submits in person, the division will process your documents while you wait.
When Can Another Business Use Your Company Name?
Your business name will be available for other entities to use immediately as soon as your company files for dissolution.