If you have decided to close your business in Arkansas, there are certain things that you should do. You need to understand the law that the state has when it comes to companies that choose to end their operations. Follow the dissolution process applicable to your business entity to avoid encountering problems in the future.
What is Arkansas Dissolution?
Dissolution refers to the legal and official way of closing a business. It’s a company’s way of informing the state that it will no longer continue its operations.
Why Does A Company Dissolve?
Why do companies need to dissolve? – Business entities need to dissolve properly to ensure that they will no longer have liability to pay annual fees and business taxes, as well as filing annual reports and other necessary documents.
Who makes the decision to dissolve? – Voting to dissolve a company will depend on the board of directors and shareholders of corporations. LLCs, on the other hand, will require the decision of their members.
How long does it take to dissolve a business?– Your company will be able to start with the process the sooner it comes up with a resolution to dissolve. After taking care of your company’s responsibilities, you can expect an additional 2 business days for the state to process the dissolution. However, it may take longer if the agency has more workload.
What Happens If Your Company Does Not Formally Dissolve?
Businesses need to register with the state to make sure all its operations are legal. All LLCs in Arkansas have to file an annual tax report, while corporations must submit annual reports and franchise taxes with the Business and Commercial Services (BCS) by May 1 of every year. If a company fails to submit by the deadline, it will face penalties. It will also continue to be liable for these filings until you officially dissolve.
Steps To Dissolve Your Business
Once you have made up your mind about the closure of your business, you should follow multiple steps to dissolve your company.
- File Articles of Dissolution with the state – LLCs in Arkansas need to file the completed Articles of Dissolution for a Limited Liability Company with the Business and Commercial Services. Corporations that filed under the new code and haven’t issued shares or commenced business will have to use DN-10-A or the Arkansas Articles of Dissolution by Incorporators or Initial Directors. Corporations that have incorporated under the new business corporation code and commenced business should file DN-10 Articles of Dissolution. Lastly, those that have incorporated under the old business corporation code will have to file the DN-07 Certificate of Dissolution of Corporation. You can only submit the documents in person or by mail.
- Remove all liabilities and obligations –Liquidate all the entity’s assets and settle all debts to the extent possible. Remove the liabilities based on the priorities set by the law. If there are any lawsuits against the company, resolve all of them. After that, you can distribute the remaining assets.
- Give notice to any claimants – Inform all possible claimants about your company’s impending closure. Notify them about your contact information and the deadline for the submission of claims.
- Tax clearance – The state of Arkansas doesn’t require business entities to submit a tax clearance. However, you will have to include a Final Franchise Tax Report along with the dissolution form. Thus, you will have to pay for the franchise tax for the current year. You can attach checks payable to the Arkansas Secretary of State for the said tax.
- Close all bank accounts, credit lines, permits, and licenses – You won’t be able to use the bank accounts and credit lines of your company once the state formalizes its dissolution. Thus, it would be best for you to close them after using the funds to take care of the company’s liabilities. You should also request the cancellation of the permits and licenses from the agency that issued them.
How DoMyLLC Can Assist With Streamlining The Process
Many people find the process of business dissolution a bit overwhelming. But your company doesn’t have to face these steps alone. You can get personalized solutions from us. You can also expect live support from our team of experts. Contact DoMyLLC and find out how we can make the dissolution process easier for your company.
Arkansas Dissolution FAQs
There is a $50 filing fee. Additionally, your company should also pay for the franchise tax for the current year.
Do you need the Department of Finance and Administration clearance before the Secretary of State will accept your dissolution?
Business entities in Arkansas don’t have to request a clearance from the Department of Finance and Administration.
The BCS usually takes 2 business days to process dissolutions that businesses send by mail. The agency may also process walk-in filings while the company representative waits.
Names of businesses that voluntarily dissolve will be available for other entities to use once the BCS formally dissolves it. However, company names of those that the agency administratively dissolved will be safe for seven years after the dissolution date.
Arkansas Business Resources
Arkansas Office of Secretary of State
Arkansas Secretary of State
Ste. 250, Victory Building, 1401 West
Little Rock, AR 72201