How to Dissolve a Corporation & Form a New One

By Elizabeth Rayne

If you are interested in forming a new corporation, you do not necessarily have to dissolve your existing corporation. Even if you have the same shareholders and similar mission, you can have two corporations operating independently. The process for dissolving and incorporating will vary depending on where the corporation is located, as each state has unique requirements. Generally speaking, you must notify the state and pay remaining debts to dissolve a corporation, and a new corporation is formed by filing articles of incorporation with the state.

Step 1

Vote to dissolve the corporation. Meet with the board of directors and create a resolution to close the business. Allow the shareholders to vote on the resolution. Move forward only if there is a majority vote by the board and the shareholders. The articles of incorporation, or the state law, may have different voting requirements for dissolution.

Step 2

Settle the corporation's debts. Notify all creditors and lenders that the corporation is closing. Distribute final paychecks to employees. Publish a notification of dissolution in a local newspaper, as many states require corporations to advertise dissolution before notifying the state that it is closing.

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Step 3

File articles of dissolution. Usually, you can find the form for the articles on the website for the secretary of state in the state where your corporation is located. Include the appropriate fee with the filing.

Step 4

File final tax forms with the IRS and the state. If you have employees, distribute final W-2's with tax withholding information, and send this information to the IRS on form W-3. File form 1120 with the IRS as your final tax return. Submit your final state tax return. On all documents, check the box "final return" where it is available.

Step 5

Select a business name for the new corporation. Check with the secretary of state in your state to ensure that the name is available for use.

Step 6

Register the new corporation with the state. Generally, you must submit articles of incorporation with the secretary of state with the appropriate fee.

Step 7

Form a board of directors and issue stock certificates to initial shareholders. Many states require corporations to complete this step as part of the registration process.

Step 8

Register with tax departments. Most states require corporations to register with the state department of revenue. Apply for an Employer Identification Number with the Internal Revenue Service. Visit the EIN Individual Request page and follow the on-screen instructions.

Step 9

Apply for licenses or permits for the corporation. Contact your secretary of state to find out what permits you may need for your business, such as a sales tax permit, professional license or food service license.

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