Any company that sees that it has reached its potential and served its purpose may eventually decide to cease its business activities. If this is the case for you, you will have to understand that the closing of a company is not as simple as it sounds. Companies must follow certain steps to formalize the decision.
What Is Kentucky Dissolution?
Dissolution in Kentucky refers to the process that a state-registered business needs to take to close formally. It involves multiple tasks, such as filing with the state and dealing with all obligations and liabilities.
Why Does A Company Dissolve?
Why do companies need to dissolve? – All business entities in Kentucky must register with the Secretary of State by filing paperwork. The same is true when it comes to closing a company. Your company has to follow a procedure involving the filing of formal paperwork. It is your way of informing the state that your company will no longer be responsible for recurring obligations.
Who makes the decision to dissolve? – A meeting of the members can decide the fate of an LLC. Meanwhile, a corporation’s board of directors has to conduct a meeting and recommend a resolution. The shareholders will vote on the said resolution to finalize the decision. Make sure all meetings are in the record book of the company for reference.
How long does it take to dissolve a business? – The time frame may vary and depend on how long it will take the company to complete all the necessary tasks. The processing time at the state may also differ, depending on the workload of the staff. Typically, it takes 3 business days to process the request.
What Happens If Your Company Does Not Formally Dissolve?
All state-registered companies in Kentucky have to file annual reports and pay for business taxes. If your company does not formally dissolve, it will remain an active business. Thus, it will be subject to filing and tax requirements. Failure to comply could put the company in bad standing.
Steps To Dissolve Your Business
To dissolve your Kentucky business formally, you should follow the process the state has set.
1. File Articles of Dissolution with the state – To dissolve an LLC in Kentucky, the company has to file the Articles of Dissolution in duplicate with the Secretary of State in person or by mail. Be sure that you do not attach additional documentation to the state-provided form.
Meanwhile, corporations need to submit the completed Articles of Dissolution in 3 copies to the Secretary of State. There are 2 types of dissolution forms companies can submit in Kentucky. First, Form IPD Articles of Dissolution is for corporations that have not issued shares or conducted business yet. Second, Form DIS Articles of Dissolution is for corporations whose board of directors of shareholders have decided to dissolve. You cannot attach additional documents on these forms, but you can draft your Articles of Dissolution.
2. Remove all liabilities and obligations – You have to liquidate all the assets of your company so you can settle all its obligations. Follow the priorities outline based on the law. Then, you can distribute the remaining assets depending on the rights and interests.
3. Give notice to any claimants – Notify all known creditors and claimants about the dissolution of the company. Inform them that they can submit their claims until the set deadline. Let them know of any changes in the mailing address. You may also publish a notice in a newspaper if you want.
4. Tax clearance – Kentucky does not require business entities to obtain tax clearance before dissolving. However, you may have to contact various agencies, such as the Department of Revenue and other licensing agencies. You can check with them if your company has remaining obligations.
5. Close all bank accounts, credit lines, permits, and licenses – After settling all obligations, you should close your business bank accounts. Doing this will be best since you cannot use them for a new business venture anyway. You should also cancel other business licenses and permits to protect your finances and reputation.
How DoMyLLC can assist with streamlining the process
DoMyLLC understands that a business owner has to go through a lot when it is deciding to close a company. However, you do not have to deal with all the tasks on your own. You can turn to a professional who has experience in handling such cases. Our services include personalized solutions and live support from our team of experts. Contact us now and let us assist you in dissolving your Kentucky business formally.
Kentucky Dissolution FAQs
The filing fee for dissolution in Kentucky is $40.
Do You Need The Department Of Revenue Clearance Before The Secretary Of State Will Accept Your Dissolution?
No, you do not. The state will send a copy of the dissolution to the department of revenue who may contact the company to close out any final taxes owed.
The Secretary of State normally starts processing the document on the day they received them. However, it may take them up to 3 business days to complete the filing.
Once you dissolve your company, your business name will be immediately available for another entity to use.
Kentucky Business Resources
Kentucky Office of Secretary of State
Kentucky Secretary of State
700 Capital Avenue Suite 152, State Capitol
Frankfort, KY 40601