Dissolution means the formal closure or termination of a company's operations, typically involving the distribution of assets and settlement of debts.
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Last Updated: January 7, 2026
Dissolution is the official closure of a business entity with the state. If an entrepreneur forms a limited liability company (LLC) or corporation, then they’ll need to dissolve the company to close it down. Usually, this entails filing the Articles of Dissolution with the state in order to formally and compliantly close the business.
If an entrepreneur wants to dissolve their business, there are several steps they need to take. While the specifics may differ depending on the company’s business type and other factors, they will generally include the steps covered below.
Depending on whether the business is publicly or privately held, the owners or board of directors must first create a resolution to dissolve.
Once this resolution is agreed upon by all shareholders, the business needs to file Articles of Dissolution with the Secretary of State’s Office in the state where the business is registered.
This LLC dissolution guide provides a more detailed explanation of these steps.
Upon filing the Articles of Dissolution, the business owners will need to take care of any outstanding responsibilities in order to close the business in good standing with the state and all shareholders. This generally means:
Business owners who want to learn more should check out these guides on the steps to take when closing a business or how to dissolve a corporation.
A few other names for dissolution include:
When a company decides to close down and follows all of the steps listed above, it is referred to as “voluntary dissolution.” This simply means that the business owners dissolved of their own accord; they chose to close down.
Unfortunately, businesses are also sometimes dissolved as the result of being out of compliance with the state. A business could fall into bad standing for the following reasons:
When a business is out of compliance (especially for an extended period), the state can choose to dissolve it. This is referred to as involuntary dissolution or administrative dissolution. Luckily, businesses that have been involuntarily dissolved can take the necessary steps to get back into compliance and file for reinstatement.
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Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. For specific questions about any of these topics, seek the counsel of a licensed professional.
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