There are many reasons why a business owner decides to close a company. Sometimes, the circumstances don’t allow it to continue, and there is no other choice but to end its operations. No matter what the reason is, it’s necessary for the owner to properly close the business to avoid encountering issues in the future.
What Is Connecticut Dissolution?
Formally closing a business is known as dissolution. The process may have some slight differences from state to state as it depends on the law in that state. However, all states require it.
Why Does A Company Dissolve?
Why do companies need to dissolve? – Connecticut dissolution officially ends a business entity’s existence as a state-registered company. It also helps put the company beyond the reach of creditors and claimants.
Who makes the decision to dissolve? – The decision for LLCs relies on the members, while corporations require the vote of shareholders on a resolution that the board of directors approved and recommended. There are also cases of involuntary dissolution through a court decree or due to administrative reasons.
How long does it take to dissolve a business? – How long it’ll take to dissolve will depend on the time your company takes to prepare its documents and settle all its obligations. Once you submit the documents to the state, you can expect an additional 3-5 business days for the state to process the dissolution.
What Happens If Your Company Does Not Formally Dissolve?
Business entities that fail to dissolve properly will still have obligations to the state. Thus, the state will be expecting you to continue to file annual reports and pay taxes. Failure to file reports and taxes can put the company in default.
Steps To Dissolve Your Business
Make sure you follow each step of Connecticut dissolution carefully to avoid having problems.
1. File Articles or Certificate of Dissolution with the state – To formally dissolve a business entity in Connecticut, the business owner has to submit Articles of Dissolution for LLCs and Certificate of Dissolution for Corporations. Companies should file these with the Secretary of State Commercial Recording Division. The state offers ready-to-use forms, but your company may also draft its own as long as it includes all the necessary information. You may submit the documents by mail, fax, or in person.
2. Remove all liabilities and obligations – Under the LLC Act of Connecticut, an LLC should prosecute and defend lawsuits, settle its business, dispose of or transfer its properties, remove its liabilities, and distribute the remaining assets to the members.
On the other hand, corporations must follow the Business Corporation Act of Connecticut. It states that a corporation that wants to dissolve should collect its assets, dispose of its properties that it cannot distribute in kind, remove or make provisions to pay for its liabilities, and distribute the remaining assets among shareholders depending on their interests. Additionally, the law also states that there’ll be no final liquidating distribution of the company’s assets to shareholders before it obtains a statement from the Department of Revenue Services and the administrator of the state’s unemployment compensation law, which indicates that:
- The company has already paid all its taxes and contributions;
- It wasn’t liable for any tax or contribution;
- Or, it made adequate provisions for the payment of unpaid taxes and contributions in the future.
3. Give notice to any claimants – This task is optional. However, it’ll help limit your liability and allow you to distribute company assets safely. Under state law, your company can send a written notice directly to known claimants. It should describe what type of information they should include in the claim, where they can send the claim, and the deadline, which shouldn’t be fewer than 120 days from the effectivity date of the notice. You should also make sure they know that your company will no longer accept claims after the deadline.
4. Tax clearance – Connecticut doesn’t require business entities to acquire a tax clearance before the dissolution. But your company will still have to pay for the business entity tax for the year that you formed it and for the years that it’s registered with the Secretary of State.
5. Close all bank accounts, credit lines, permits, and licenses – Once you officially closed your business and finished dealing with all its responsibilities, you’ll no longer be able to use the bank accounts and credit lines under the company name. Thus, you may have to close them. Contact your bank about this process.
It’ll also be best for your company to contact agencies and cancel all the permits and licenses with them.
How DoMyLLC can assist with streamlining the process
The steps can be a bit overwhelming. Not everyone has the time and patience to learn and deal with these. That is why we’re here to help with your Connecticut dissolution. We offer personalized solutions and live support. Ensure that your company legally and formally closes without hassle. Contact DoMyLLC now.
Connecticut Dissolution FAQs
There is no filing fee for the dissolution of a business entity in Connecticut. If your company chooses to expedite processing, it has to pay a $50 filing.
Do You Need The Department Of Revenue Clearance Before The Secretary Of State Will Accept Your Dissolution?
Clearance isn’t necessary to dissolve a company in Connecticut.
Normal processing takes 3-5 business days, while expedited processing is done within 24 hours.
Other business entities can immediately use your company name upon dissolution.
Connecticut Business Resources
Connecticut Office of Secretary of State
Connecticut Secretary of State
30 Trinity Street
Hartford, CT 06106