Why Does A Company Dissolve?
Why do companies need to dissolve? – Illinois requires business entities to submit formal paperwork when they start their companies. Likewise, all companies that wish to end their operations have to file paperwork with the state. This way, the state will know that the company will no longer conduct business and not have to file annual reports and pay fees or taxes.
Who makes the decision to dissolve? – For LLCs in Illinois, the decision will depend on the members. Meanwhile, the board of directors of a corporation has to adopt a resolution. The shareholders will vote on the resolution to dissolve the company.
How long does it take to dissolve a business? – It may take weeks for you to finish the whole process. The time frame may vary depending on how long it will take for your company to settle all its obligations. After filing the proper documents, the state may take 7 to 10 business days to process them.
What Happens If Your Company Does Not Formally Dissolve?
Unless you dissolve your business formally, the state will treat it as an active company. Thus, it will still have obligations to file annual reports and pay for necessary fees. Failure to comply with the state requirements may lead to penalties.
Steps To Dissolve Your Business
Illinois implements a dissolution process that business entities operating within the state have to follow.
1. File Articles of Dissolution with the state – LLCs in Illinois have to file Form LLC 35-15 Statement of Termination, while corporations have to use Form BCA 12.20 Articles of Dissolution. File the completed form in duplicate with the Secretary of State by mail or in person.
2. Remove all liabilities and obligations – Your company may continue to exist following its dissolution for winding up. Under the LLC Act of Illinois, all LLCs that close will have to preserve the business or property for a reasonable time, prosecute and defend lawsuits, settle disputes through mediation or arbitration, close the business, dispose of and transfer the properties, remove all liabilities, and distribute remaining assets to members.
Corporations need to follow the Business Corporation Act of Illinois. It states that all corporations going through dissolution should collect its assets, dispose of properties it cannot distribute in kind, create provisions to pay for liabilities, and distribute remaining assets to shareholders based on the interests.
3. Give notice to any claimants – You may send a written notice to all known creditors and claimants to inform them about the dissolution and provide instructions on how they can submit their claims. The deadline for submission should not be less than 120 days from the date the dissolution takes effect. You have to clarify that your company will no longer receive any claims after the said deadline.
4. Tax clearance – The state of Illinois does not require tax clearance when dissolving a company. However, the Secretary of State will check your company’s tax status before accepting your documents. Thus, you have to make sure you pay for all applicable franchise taxes, fees, and interest. Additionally, you also have to check the final return box on your company’s IRS form for federal tax purposes.
5. Close all bank accounts, credit lines, permits, and licenses – To avoid having to deal with legal problems in the future, you have to close all business accounts. Additionally, your company may have secured permits and licenses when it started. You have to cancel all these to prevent reporting or any fiscal obligations.
How DoMyLLC can assist with streamlining the process
Dissolving a company may require a better understanding of the multi-step process. If you want guidance for a hassle-free Illinois dissolution, you can check out our services. We also offer personalized solutions and live support from our team of experts. Contact us now and find out how we can help your Illinois company.
Illinois Dissolution FAQs
The filing fee for dissolution is $5. An additional $50 will be necessary to expedite the process.
Illinois companies do not need to secure clearance when dissolving.
The Secretary of State normally takes 7 to 10 business days to process dissolution documents. You can choose the 24-hour expedited processing for an additional fee. However, you may only request this service in person at the Springfield or Chicago offices.
Another business entity can claim your company name a day after the dissolution.
Illinois Business Resources:
Illinois Office of Secretary of State
Illinois Secretary of State
501 S. Second St., Ste 328 (or: Ste 351)
Springfield, IL 62756