Running a business has its ups and downs, and there will be times when a corporation may voluntarily close down. However, there are many processes one must go through to file articles of dissolution.
If your business is dealing with this, then you’re in the right place. In this post, our team will detail how to dissolve a corporation in Illinois to ease your worries.
How to Dissolve a Corporation in Illinois
Forming an Illinois corporation has been a popular option for many business owners for its flexible tax treatment, limited liability, and affordable registration costs. However, like any other state, Illinois has specific requirements if you want to dissolve your corporation.
From preparing the resolution to dissolve up to managing remaining assets, the state of Illinois determines the specifications and duration of the process.
Before dissolving your corporation, read first the step by step process of how to setup an LLC here.
Process of Dissolving a Corporation
Before proceeding to dissolve an Illinois corporation, a meeting between the board of directors must be held so that everyone within the company’s authority may agree upon the decision.
The board of directors can vote to declare the corporation’s dissolution through the shareholder meeting, followed by discussing the steps to be taken after it. During the negotiations between shareholders and directors, you will need to note every piece of information and agreement to maintain the corporation record.
A corporation’s dissolution can also be executed solely through the shareholders’ consent in compliance with Illinois’ business corporation act. The motion to dissolve may only proceed if the two-thirds or majority of shareholders listed in articles of incorporation approved the said decision.
Your registered business can also be involuntarily dissolved through a court order caused by failure to file an annual report of franchise taxes.
Filing Articles of Dissolution with the Illinois Secretary of State
Once the decision of dissolving a corporation has been agreed upon via unanimous vote, the company will need to file the Articles of Dissolution (Form BCA-12.20) with the Illinois Secretary of State .
Any Illinois corporation undergoing dissolution must submit a form and provide details such as the corporate name, services mailing address, date of dissolution, and list of issued shares and authorized representatives to the secretary of state’s office.
Filing of these documents requires small processing fees with a check payable to the secretary of state. You can mail the form and fees to the Department of Business Services in Springfield, where the office of the secretary of state is located.
Now that the dissolving process of your business is underway with Illinois’ secretary of state, your corporation will remain afloat to settle certain business matters. To wind up the company, you’ll need to assign one or two people from major shareholders and directors during the meeting to manage the dissolution.
Dissolved corporations must comply with the BCA law under the order of the Illinois secretary of state, which includes the collection of business assets, distribution of corporate properties to shareholders, and dissolving corporate liabilities.
Our team advises you to prioritize dealing with liabilities because the law suggests that shareholder asset distribution can only occur after the tax and credit settlement.
Issue Notice to Creditors
Registered corporations that need to dissolve have the responsibility to inform their creditors and other claimants. Although giving notice isn’t mandatory, it prevents delay and discrepancy in the distribution of shares.
Under the law, claims to dissolved Illinois corporations have a deadline of 120 days from the effective date to file a form demanding the company to pay its debts.
The department of revenue doesn’t require tax clearance for any Illinois corporation, but the secretary of state won’t take your articles of dissolution if the business has unpaid liabilities.
Important Facts About Dissolution
After being informed on how to dissolve a corporation in Illinois, you should note that this process doesn’t transfer the title to the business property or prevent handing over shares. Dissolution of Illinois corporation also doesn’t stop the execution of lawsuits by or against the business.
Corporation Name After Dissolution
Right after the dissolution process, the business name of an Illinois corporation will be made available by the secretary of state. If your corporation got dissolved through non-submission of annual reports, you could file for reinstatement. However, if you went through voluntary dissolution, your corporation’s name will appear available for all businesses.
Duration of Dissolution in Illinois
Now that our team laid out the steps, the next detail you should look into is how long does it take to go over the entire procedure. The paperwork to dissolve an Illinois corporation will be processed thoroughly by the secretary of state and can take about 7-10 days to complete.
If you’re concerned about having to wait 10 business days, we advise you to request expedited services in person, which will save you a bit of time when dissolving an Illinois corporation.
Cost of the Entire Dissolution Process
As previously mentioned, dissolving an Illinois corporation requires a minimal $5 filing fee to the state’s office secretary. Should you find yourself in the bind of time, you can go in person and request to expedite the process with a $50 fee.
How do I dissolve a corporation in Illinois?
To dissolve a corporation in Illinois, the shareholders must conduct a meeting and agree upon the decision before filing it to the secretary of state and proceeding with the settlement of credits and claims. You should assign directors to manage winding up the corporation and distribute shares.
Putting a close to any business venture can never be easy, especially in terms of legal procedures. After learning how to dissolve a corporation in Illinois through this detailed post, our team hopes that you can complete the whole process with ease.
By going through each step mentioned in this list carefully, you wouldn’t be inconvenienced with unnecessary issues amid all these procedures.