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 Vermont Dissolution?
When you formed your company in Vermont, it has gone through a process to register its business. Thus, if you want to end business activities, you will have to go through another process. It is known as dissolution.
Why Does A Company Dissolve?
Why do companies need to dissolve? – All business entities in Vermont must file paperwork to register with the Secretary of State. The same applies when a company decides to close. Your company has to submit paperwork to formalize the business closure. It is to inform the state that your company will no longer be responsible for recurring obligations.
Who makes the decision to dissolve? – A company must hold a meeting to finalize its decision to dissolve. LLCs need the approval of members, while corporations require the approval of the board of directors and shareholders. Make sure the minutes of the said meeting are in the record book of the company for reference. There are also cases when the state terminates companies administratively.
How long does it take to dissolve a business? – The time frame will depend on how long it will take your company to finish the tasks. From creating a resolution to the settling of your company’s obligations, the whole process can take time. Your company may have to spend weeks to complete the whole ordeal. The Secretary of State usually takes 3-5 days to process the documents.
What Happens If Your Company Does Not Formally Dissolve?
All business entities in Vermont have to file annual reports and pay taxes. If your company does not formally dissolve, it will remain an active business. Thus, it will be subject to filing and tax requirements. It will also remain liable to all corporate acts in the past.
Steps To Dissolve Your Business
To dissolve your business formally, you should follow the process.
1. File Articles of Dissolution with the state – To dissolve an LLC in Vermont, the company has to file a Limited Liability Company – Termination form, while a corporation has to submit Articles of Dissolution. You do not have to use the ready-made forms since the state allows companies to draft their own. File the form with the Corporations Division of the Secretary of State in duplicate. The state requires original signatures, so you can only submit by mail or in person.
2. Remove all liabilities and obligations – You have to liquidate all the assets of your Vermont company to settle all its obligations. Follow the priorities outline the law has set. If your company has remaining assets, distribute them to members or shareholders according to ownership interests.
3. Give notice to any claimants – Notify all known creditors and claimants about the dissolution of your company. You can check your company’s records to find out how you can reach them. You may send a written notice, which states the mailing address where they can submit claims and the deadline. You may also publish a notice in a newspaper to inform other possible claimants.
4. Tax clearance – Vermont does not require business entities to obtain tax clearance before dissolving. However, you have to make sure your company has no pending obligations. For federal tax purposes, you should also indicate in the company’s IRS form that it will be the final tax return.
5. Close all bank accounts, credit lines, permits, and licenses – Once the dissolution of your company is final, you will no longer be able to use the bank accounts under its name. Thus, it will be best to contact the bank and close the accounts. You should also cancel all business licenses and permits that your company has acquired throughout its existence.
How DoMyLLC can assist with streamlining the process
A business owner has to take care of a lot of responsibilities, even when they have decided to close the company. Dealing with all the tasks may be too much, especially for someone who has never done it before. But you do not have to worry. You can rely on our team of experts. We can provide live support. We can also give your Vermont company personalized service. Contact us now to find out more about our services.
Vermont Dissolution FAQs
The filing fee for dissolution in Vermont is $20. The Secretary of State does not accept cash or credit card payments, so you should attach a check when you submit your documents. The check must be made payable to the Vermont Secretary of State.
Do You Need The Department Of Revenue Clearance Before The Secretary Of State Will Accept Your Dissolution?
Vermont does not require companies to obtain tax clearance before dissolving.
The Secretary of State normally takes 3-5 days to finish processing dissolution documents. However, the processing time varies depending on the workload of the office.
Once you dissolve your company in Vermont, your business name will be immediately available for another entity to use. Meanwhile, the names of companies that the state has terminated involuntarily will be safe for 5 years.
Vermont Business Resources
Vermont Office of Secretary of State
Vermont Secretary of State
128 State Street
Montpelier, VT 05633-1104