What Is Colorado Dissolution?
If you have reached the point of deciding to close your company, then you should be aware that it is more than locking the doors of your office or establishment. There is a process that you need to follow in order to legally dissolve the company from the state’s register of operating businesses in the state. This process is called Colorado dissolution.
Why Does A Company Dissolve?
Why do companies need to dissolve? – Companies in Colorado are registered with the Secretary of State. Filing a dissolution will put an end to all obligations with the state, including tax filings and report submissions. Furthermore, Colorado dissolution will protect you from future liabilities with claimants.
Who makes the decision to dissolve? – The Colorado LLC Act allows the voluntary dissolution of LLCs through the agreement of all members. Alternatively, an LLC can look at its operating agreement and review its rules on dissolving the company to find out the required number of votes of members. Meanwhile, the Business Corporation Act allows the same for corporations through a shareholder vote on a resolution to dissolve that the board of directors has approved.
How long does it take to dissolve a business? – The way your company takes care of its responsibilities can affect the time you will need. The sooner your members or shareholders come up with a final decision, the better. Make sure your company takes care of all its obligations as soon as possible. When you finish all of these, your company will only have to wait for the Secretary of State to process the documents, which are usually processed in real time.
What Happens If Your Company Does Not Formally Dissolve?
Some people think that it is okay to not go through the Colorado dissolution process since it will not affect them once they stop their business operations. What they do not know is that doing this can lead to consequences that can affect them in the future.
Companies will continue to have obligations to the state until it formally dissolves. Thus, your company will remain liable for filing reports and paying taxes. Failure to file will lead the Secretary of State to classify your business as delinquent. This status will remain indefinitely.
Steps To Dissolve Your Business
To ensure that your Colorado business dissolves properly, follow the process that the state has set.
1. File Statement or Articles of Dissolution with the state – LLCs should file a completed Statement of Dissolution with the Secretary of State. Corporations will have to use the Articles of Dissolution form. Your company can submit its filings online and furnish it with online payment information.
2. Remove all liabilities and obligations – Your company has to take care of final matters, which include the following:
- Settle all disputes
- Collect company assets
- Dispose of properties
- Make provisions to pay obligations
- Distribute remaining assets properly
3. Give notice to any claimants – Inform all known creditors and claimants about your company’s dissolution. This step is optional. However, it will help in limiting your liability. It will also allow your company to distribute assets safely. According to state law, your company can send a written document to all known claimants after the Colorado dissolution. It should include the deadline, which should not be less than 2 years after the date of delivery of the notice. To inform unknown claimants, your company can choose to publish a notice in a newspaper.
4. Tax clearance – The state does not require business entities to obtain tax clearance from the Department of Revenue. However, your company should check the final return box on its IRS form for federal tax purposes.
5. Close all bank accounts, credit lines, permits, and licenses – Contact or visit the bank in charge of your company’s accounts. Ask them about the procedure that you will have to go through to close accounts and credit lines. You should also cancel your company’s permits and licenses with the agency where you acquired them.
How DoMyLLC can assist with streamlining the process
The whole process Colorado dissolution involves multiple steps. If you need guidance and support, you can rely on DoMyLLC. We offer personalized solutions and live support from our team of experts. Contact us now to learn more.
Colorado Dissolution FAQs
Dissolving a business entity in Colorado comes with a $10 filing fee.
No, you do not have to secure a clearance because it is not one of the requirements in Colorado.
The state will process Dissolution submissions in real time.
Your company name will immediately be available for other business entities after the status changes to dissolved.
Colorado Business Resources
Colorado Office of Secretary of State
Colorado Secretary of State
1700 Broadway, Ste 200
Denver, CO 80290