No matter how successful your business is, nothing is ever certain. There’s always a chance that you may decide one day to close your doors and dissolve the business.
This is nothing to be ashamed of. In fact, there are a variety of reasons why businesses choose to dissolve. For example, you might consider closing your business to avoid bankruptcy, accommodate partners who want to retire, or move forward with starting a new business venture entirely.
No matter the reason, make sure you properly dissolve the business entity. Failure to do so can result in a number of potential consequences including:
For these reasons, and many more, it’s crucial that you timely and properly dissolve your entity if and when the time comes. What many don’t realize, however, is that properly forming your business at the outset can go a long way toward making eventual dissolution as smooth as possible.
For those looking for assistance with the business formation process, use our Illinois limited liability company (LLC) service and corporate formation service to help you start your Illinois business off on the right foot.
Before you dive in, there are a few things you should do first to prepare to dissolve an Illinois business.
Primarily, you’ll want to establish a secure and thorough record of all corporate or LLC dealings for your business. This helps streamline the information gathering process moving forward.
While you may feel tempted to jump right into dissolution, it’s important to remember that doing some of the tedious and time-consuming work up front can help you save valuable time and stress later on down the line.
Looking for help with dissolving your Illinois business? Use our guide below to learn more about how to dissolve a business in Illinois and see how we can help.
To start off the dissolution process, you’ll first need to establish a valuation of your Illinois business. To do this, you should locate all available information about your business’s assets. This will include any real estate, inventory, and other company-owned property.
Additionally, make sure to gather any documents related to your business operations, including contracts with third parties and tax information. Doing so is essential to establishing an accurate valuation for your business.
Also, don’t be afraid to seek professional assistance. If you’re not sure how to value certain parts of your business, hiring a professional can be a great way to better ensure that you have an accurate valuation.
Need help getting started? Use our Worry-Free Compliance service and our ZenBusiness dashboard to help keep your business documents organized and simplify the process of gathering your business information.
Next, it’s time to account for any business debts. It’s important to remember that just because you’re closing your business doesn’t mean that your business’s debts go away automatically.
In fact, identifying your business debts is just as necessary as identifying the assets. Failure to do so can result in potential repercussions for the business and individual owners.
Thus, always make sure you appropriately determine how much money you owe and to whom in the process of dissolving your Illinois business.
Next, you’re ready to identify your state’s official dissolution document. This is called the Articles of Dissolution in Illinois for corporations and a Statement of Termination for limited liability companies (LLCs).
Once you complete the appropriate form, you then submit it to the Illinois Secretary of State Department of Business Services either in person or by mail.
In addition to following state law on the dissolution process, you also need to follow any instructions set forth in your business’s governing documents, if any.
Illinois businesses are subject to certain default rules that apply where a business doesn’t have operating documents that discuss dissolution. However, most businesses do have dissolution procedures set forth in their governing documents, such as an operating agreement for LLCs or corporate bylaws for a corporation. If your business does have such a document, make sure to closely follow the procedures set forth for dissolution.
Don’t have an operating agreement for your LLC? Use our LLC operating agreement template to help you get started. With our template, you can craft an operating agreement that sets forth clear dissolution rules that work for your business, which can help prevent disputes and simplify the dissolution process later on.
The next step is to cancel any outstanding licenses, permits, and registrations you have for your business.
In the course of operating, many businesses have to obtain some sort of licensing or permitting. These often vary by state, local municipality, profession, and other factors. Examples of business licenses and permits that many businesses must obtain include:
Many of these must be renewed periodically. Further, some may renew automatically.
Once you dissolve your business, however, you’ll no longer need these licenses, permits, and registrations. Don’t waste money on unnecessary renewal fees. Avoid this by making sure you promptly cancel anything you don’t need.
As you near the end of the process, the next step is to wrap up any remaining legal and financial obligations of the business.
For example, if your business has employees, you must be careful to abide by all applicable laws and regulations — both state and federal — regarding final payments or other earned benefits to employees. Additionally, you need to file your final tax returns and timely cancel your EIN.
The final step necessary to dissolve an Illinois corporation or dissolve an Illinois LLC is to actually file your Articles of Dissolution or Statement of Termination. And as always, don’t forget to pay the appropriate filing fee.
While the dissolution process may seem overwhelming, know that we’re here to help. By carefully following the steps in this guide, you can better prepare for dissolving your Illinois business properly and efficiently.
Most businesses don’t start their venture with a goal of closing. Nevertheless, there may come a time when you decide you’re ready to close your doors and dissolve the business. When this happens, it’s important to be prepared.
The best way to do so is to ensure that your business is running smoothly and staying in compliance along the way. No matter what stage you’re at in your business’s lifecycle, we’ll be here to assist with your business’s needs. Use our services to help you start, manage, and grow your Illinois business.
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.
To dissolve your Illinois business, you’ll need to file Articles of Dissolution or a Statement of Termination with the Secretary of State. Before doing so, however, make sure you get your affairs in order to help speed the process along.
Fees vary and are always subject to change. Therefore, make sure to check periodically with the Illinois Secretary of State for current and updated filing fee information.
Illinois voluntary dissolution for businesses is effective upon the date of filing with the Secretary of State.
The process for dissolving a nonprofit corporation in Illinois is very similar to the process for dissolving a for-profit corporation. To do so, you’ll file Articles of Dissolution with the state.
Illinois Business Resources
Business Dissolution by State