Steps to Dissolve Your Idaho Business
- Establish a valuation of your Idaho business
- Compile a full account of your Idaho business’s debts
- Identify Idaho’s official dissolution document
- Follow instructions in your Idaho business’s operating document
- Cancel your Idaho business’s permits, licenses, and registrations
- Wrap up your Idaho business’s legal and financial obligations
- File the Articles of Dissolution for your Idaho business
Even the most successful business owners may have a need at some point or another to close up shop. For example, a business may seek dissolution as a means of avoiding bankruptcy. In other cases, one or more owners of the business may simply want to retire or move on to a new business venture entirely.
Whatever the case may be, the fact remains that dissolution is an important step in the business life cycle for many entities. And no matter what the business’s financial situation is or what debts it has, it’s imperative that the process is completed properly. Therefore you need to know how to dissolve a business in Idaho.
Failure to properly dissolve an Idaho business can lead to a number of potential negative consequences including:
- Continued tax liability or reporting requirements to the government
- Fines and other financial penalties for the business entity itself and its individual owners
- Negative impact to the business owners’ credit and future business ventures
Before ever getting to dissolution, however, you’ll first have to form your Idaho company. The better you plan out your business from the start, the less problems you’ll have later on. Need assistance with the entity formation process in Idaho? Use our Idaho LLC formation service or corporation formation service to help you start your business off on the right foot.
Before dissolving your Idaho business
Dissolving a business can be a complicated and time-consuming process. This is especially true if you kept poor records while your company operated, and therefore, don’t have all of the information you need at your fingertips. While your business operates, it’s best to establish a secure and thorough record of all of your corporate or LLC dealings. This will help streamline the process as you begin your dissolution.
Doing the legwork upfront might feel tedious, but know that doing this work now will save you a significant amount of time and effort later.
If you’re not sure where to begin, you’re not alone. Use our guide to learn more about the dissolution process in Idaho and what you can do to make this transition as smooth and efficient as possible.
Step 1: Establish a valuation of your Idaho business
The first step to properly dissolving your Idaho business is to establish a valuation of the business. It’s important to ensure that the valuation is as accurate as possible.
Gather information about any and all business assets. This includes real estate, inventory, and anything of value owned by or in the possession of the business.
Additionally, gather any documents and information related to the business and its operations. This might include tax information or contracts with third parties.
Determining an accurate valuation is critical, so it’s best not to guess if you’re not sure of something. Thus, err on the side of caution, and don’t be afraid to hire a professional if you’re not sure how to value something related to your business.
While gathering this information can feel overwhelming, it doesn’t have to be. Use our Worry-Free Compliance service and our dashboard to help keep your business documents organized. This will make it easier to gather your business information when you need it.
Step 2: Compile a full account of your Idaho business’s debts
Just as important as the business’s assets are its debts. You need to capture how much money the business owes and to whom.
A common misconception is that a business that’s about to dissolve doesn’t have to worry about its existing debts. Just because you plan to close your business doesn’t mean that the business’s debts go away.
In fact, there can be serious legal consequences for a business’s failure to pay its remaining business debts. Such consequences might include:
- Piercing the corporate veil
- Individual member or owner liability
- Fines and other financial penalties
Don’t get your soon-to-be-dissolved business in hot water. Rather, account for your business debts from the beginning of your dissolution process.
Step 3: Identify Idaho’s official dissolution document
Once you’ve accounted for the assets and debts of the business, you’re ready to move forward. Next, it’s time to identify the official dissolution document in your state.
Articles of Dissolution are used to dissolve an Idaho corporation, and a Statement of Dissolution is used to dissolve an Idaho LLC (limited liability company).
Once you complete your form, you need to file it with the Office of the Secretary of State. Paper filings can be submitted by mail. However, for lower fees and quicker filing times, businesses are encouraged to file online.
Step 4: Follow instructions in your Idaho business’s operating document
Before filing your dissolution paperwork with the state, first make sure to follow any applicable instructions in your business’s governing documents.
Idaho law does provide certain default rules when it comes to dissolving a business. However, many entities have governing documents — such as bylaws for a corporation or an operating agreement for an LLC — that will outline more specific procedures.
If your Idaho business has governing documents that discuss the process for dissolution, make sure to follow those rules to the letter. Otherwise, you must follow state law. And regardless of whether your business has an operating document and what that document says, you always need to file the proper dissolution paperwork with the state.
Having governing documents for your entity that set forth clear rules for the business is a great way to prevent problems and disputes in the future. If your Idaho LLC doesn’t have an operating agreement, use our operating agreement template to help you get started. From there, you can more easily and effectively customize the rules and procedures to fit the needs of your business.
Step 5: Cancel your Idaho business’s permits, licenses, and registrations
In most cases, businesses must obtain certain licenses and permits to legally operate in a given state, county, or municipality. To get those licenses, the business must pay any accompanying fees. Many of these licenses and permits must be renewed periodically. Sometimes, these renewals (and the deduction of the renewal fees from your bank account) happen automatically.
However, once a business is no longer in operation, the need for those licenses, permits, and registrations will cease. When the time comes to dissolve the business, don’t forget to cancel any licenses you’ve obtained. Check to ensure that any licenses set for auto-renewal have been canceled as well. Failure to do so can result in paying for licenses and permits that the business no longer needs.
Step 6: Wrap up your Idaho business’s legal and financial obligations
As you near the final stages of dissolution, you can begin wrapping up any remaining legal and financial obligations of the business. Examples of items you may need to address include:
- Making final payments or other earned benefits to employees
- Filing final tax returns, both state and federal
- Canceling your Employer Identification Number (EIN)
If you have any questions about tax implications for the business, be sure to consult with a certified tax professional.
Step 7: File the Articles of Dissolution for your Idaho business
Finally, you’re ready to file the Articles or Statement of Dissolution for your Idaho business. Make sure to submit your completed paperwork and the requisite filing fee to the Idaho Secretary of State.
Importantly, the dissolution becomes effective on the date you file your paperwork with the state. So don’t file your Articles or Statement of Dissolution until you’ve completed all other steps in the process and are fully ready to do so.
We are here to help
No matter what circumstances led to the dissolution of your business, be proud of the work you’ve accomplished.
Owning and operating your own business is exciting and rewarding. But it also requires a great deal of hard work and dedication. We’re here to assist hardworking business owners just like you. Let us help you start, manage, and grow your business, and work to help you stay compliant with Idaho law at every step along the way.
Disclaimer: The content on this page is for information purposes only, and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.
- How do I dissolve a business in Idaho?
To dissolve your Idaho business, you need to file Articles or a Statement of Dissolution with the Secretary of State. First, however, you need to gather some important information about the business to ensure that the dissolution process goes as smoothly as possible.
- How much does it cost to dissolve an LLC in Idaho?
Fees vary by the type of filing document and are always subject to change. So make sure to check periodically with the Idaho Secretary of State to ensure that you have the most up to date filing fee information. Additionally, note that paper filings typically incur an additional manual processing fee.
- How do I dissolve a nonprofit organization in Idaho?
The process for dissolving a nonprofit organization in Idaho is similar to the process for dissolving a for-profit organization. However, there is a different Articles of Dissolution form specifically for nonprofit corporations.