What Is Massachusetts Dissolution?
A business undergoes the dissolution process when it decides to end all activities. Massachusetts dissolution means the owners will deal with all the company’s obligations and formalize the closure of the business.
Why Does A Company Dissolve?
Why do companies need to dissolve? – Under state law, companies in Massachusetts have to file paperwork if they want to start doing business. Likewise, the state also requires companies that want to stop their operations to submit formal paperwork. This way, the state will be aware that the company is not active and will not be liable for the annual fees and filings.
Who makes the decision to dissolve? – Check the formation documents of your company. There may be a provision there regarding the dissolution of your company. But, generally, LLCs require the vote of members. Corporations, on the other hand, need shareholders to vote on a resolution that the board of directors recommended.
How long does it take to dissolve a business? – It may take weeks for a company to complete the whole process. However, the time frame may change depending on how long the company takes to accomplish each step. As for the state, it normally takes 3-5 business days to process the documents.
What Happens If Your Company Does Not Formally Dissolve?
Your company continues to exist until it completes Massachusetts dissolution formally. Thus, it will still have to file annual reports and pay for business taxes. Additionally, it will also remain liable for all its corporate acts in the past. So, it remains vulnerable to claims and penalties.
Steps To Dissolve Your Business
1. File Articles of Dissolution with the state – An LLC has to submit a Certificate of Cancellation to the Corporations Division of the Secretary of the Commonwealth. Your company should draft the certificate based on the statutory requirements since the state does not have ready-to-use forms. Include the following information:
- Federal Employer ID Number
- LLC name
- The date the company filed the Certificate of Organization
- Reason for the cancellation filing
- The date the cancellation takes effect
- Other information you think are necessary
- Signature of an authorized person
If your corporation has not commenced business yet or issued shares, use the Articles of Voluntary Dissolution of Corporation Which Has Not Issued Shares or has Not Commenced Business. Otherwise, file the Articles of Voluntary Dissolution with the Corporations Division of the Secretary of the Commonwealth.
2. Remove all liabilities and obligations –Under the LLC Act of Massachusetts, LLCs have to prosecute or defend lawsuits, dispose of properties, remove or make provisions to pay for liabilities, and distribute remaining assets to members. Under the Business Corporations Act of Massachusetts, corporations need to collect all assets, dispose of properties it will not distribute in kind, create provision for all existing and foreseeable obligations, and distribute the remaining assets among shareholders.
3. Give notice to any claimants – The state does not require business entities to send notice to creditors. However, it can help limit your liability and allow the safe distribution of company assets. Send a written notice to the people whose claims you dispute. You may also send a written document to all known claimants to inform them about the dissolution and how they can submit claims. You may also publish a notice in a newspaper to reach unknown claimants.
4. Tax clearance – Massachusetts does not require business entities to obtain tax clearance. However, your annual report filings and fees should be current. Corporations also have to file a final tax return with the Department of Revenue. They should also inform the department about the dissolution within 30 days after they get the authorization for the dissolution.
5. Close all bank accounts, credit lines, permits, and licenses – To protect yourself from possible legal issues, close all bank accounts under the name of your company. You also have to cancel all permits and licenses that your company secured when it started its operations.
How DoMyLLC can assist with streamlining the process
If you need help in handling the steps for Massachusetts dissolution of your company, you can leave the filing to us. Our services include live support and personalized solutions. Contact us now and learn more.
Massachusetts Dissolution FAQs
The filing fee is $100. Fax filings require expedited processing and the additional fee of $9.
No, it is not a requirement.
The state will take 3-5 business days to process mailed documents. Walk-in filings take 1-2 business days. If you fax your documents during business hours, you can expect same-day processing. But, if you fax after hours or on a weekend, the processing time is about 48 hours.
Names of LLCs will be available for use immediately after dissolution. A corporation can request for the reservation of its business name during the winding up process. File an Application for Name Reservation and indicate that the corporation has dissolved but needs legal existence for the winding up. If the Secretary of Commonwealth approves the application, your business name will be safe for 60 days. You may extend the reservation for an additional fee.
Massachusetts Business Resources
Massachusetts Office of Secretary of State
Massachusetts Secretary of State
One Ashburton Place, 17th floor
Boston, MA 02108