How to Close Down a C-Corp

By Heather Frances J.D.

A corporation, also referred to as a C corp, is an independent legal entity formed when an incorporator files the articles of incorporation, or similar document, with the state. Corporations typically have perpetual existence, which means they continue to exist until they are officially dissolved. While the exact procedure for closing a C corp can vary among states, some of the steps involved in closing a corporation are the same across all states.

Authorization to Terminate

Corporations are typically governed by a board of directors, which makes decisions on behalf of the corporation, including the decision to terminate the C corp’s existence. The board must authorize a dissolution as per the corporation's bylaws, which are the rules a corporation adopts to regulate its own affairs, as well as the state's dissolution statute. For example, a C corp's bylaws or state dissolution statute may require a majority vote of the board or shareholders to terminate a C corp.

Articles of Dissolution

Though state paperwork requirements can vary, corporations typically must file articles of dissolution, or a similar document, with their state’s business registration authority, often the secretary of state, which is the same registration authority where the corporation filed its articles of incorporation. If the corporation operates in more than one state, it might have to file notices in each state where it operates. If a C corp is in possession of business licenses, it might also have to file paperwork to terminate those as well.

Ready to incorporate your business? Get Started Now

Winding Up

Before a corporation can cease to exist, it must wind up its affairs, meaning it must pay all outstanding obligations and debts, including loans to the corporation by shareholders. The corporation should also set aside money for any claims that might arise after the corporation dissolves. The C corp must also take steps to close bank accounts and terminate leases or contracts. Federal and state taxes continue to accrue until the date of dissolution, so the corporation must file final tax forms, including those for payroll and sales taxes as well as income tax returns, and indicate the corporation is terminating.

Notice to Creditors

State law may require a corporation to provide written notice of its dissolution to known creditors, allowing them an opportunity to present their claims against corporate assets by a specific date. Some states might allow a corporation to publish a public notice to unknown creditors, advising them to file their claims within a specific time frame or forfeit the right to make a claim.


If a C corp has any remaining assets after it pays its creditors and state approves its dissolution, it must distribute them as set forth in the corporation’s bylaws or by state law. Typically, a corporation must distribute remaining assets to its shareholders in proportion to the number of shares each shareholder owns. The C corp must also file the appropriate tax paperwork in which it reports the distributions made to shareholders.

Ready to incorporate your business? Get Started Now
The Dissolution of an S Corp


Related articles

How to Get an S-Corporation Enterprise

An S corporation is a corporation that has been approved by the IRS to be taxed under Subchapter S of the Internal Revenue Code. An S corporation is typically not taxed as an entity. Instead, the IRS and many state governments tax shareholders of an S corp on their proportionate shares of the corporation's taxable income. This results in a net tax savings in many cases. To form an S corporation, you must form a corporation that complies with Subchapter S restrictions, and then elect S corporation taxation with the IRS.

Corporation: Withdrawal Vs. Dissolution

A corporation is an independent business entity, formed under state law by filing articles of incorporation. The state where the corporation is originally formed is the business's home state or domicile. A corporation then has the option to do business in other states, but must register as a foreign entity in these states in order to do so. If a corporation wants to stop doing business in these other states, it may "withdraw" its business there. If it wants to stop doing business completely, it must "dissolve" in its home state.

How to Cancel an Incorporation

When a business incorporates, it becomes a distinct legal entity. The corporation’s liabilities are its own; its shareholders are generally not personally responsible for those obligations. The incorporation is also required to file its own tax returns. Due to its legal independence, cancelling corporate status requires filing documents with a number of organizations. Businesses incorporate under state law, so the specific steps for dissolving the organization will vary. Check the laws of the state where the business is incorporated for the exact process your corporation will have to follow.

LLCs, Corporations, Patents, Attorney Help

Related articles

Terminating a New York S Corp

A corporation is considered an independent legal entity under New York state law. S corporation status is an IRS tax ...

How to Re-Open a Dissolved Company

In theory, corporations can exist forever, but they can also go out of business or be dissolved for other reasons. For ...

Closing an S Corporation in Georgia

S corporations are business entities that are closely held by a small number of shareholders. All corporations must ...

If I Have a C Corporation, Can I Operate in Multiple States?

All corporations are formed under state law and are distinct legal entities, separate from their owners — the ...

Browse by category
Ready to Begin? GET STARTED