There’s a lot more to the dissolution process than just filing paperwork. Think back to when you started your business. Filing formation documents with the state was just the beginning. Then came creating internal operating documents, applying for an Employment Identification Number (EIN), obtaining the necessary licenses and permits, opening a bank account—you know the rest. To properly dissolve your Kentucky business, you essentially need to undo all that.
When you want to shut down your company, it’s important to officially dissolve your Kentucky business with the state or face potential liability. If you don’t notify the state, Kentucky will continue to expect tax payments and annual reports because on paper, your business still exists. In this article, we’ll walk through how to dissolve a business in Kentucky.
The dissolution process requires a lot of information about the business. From tax documents to records of business dealings, you need to have this information readily accessible. This is why creating a secure, thorough, and accurate record of your business affairs is so important.
When you use our Worry-Free Compliance Service, we keep your business documents organized on our dashboard. This gives you access to what you need when you need it.
When valuing a business, you’re trying to determine its economic worth. The value is useful when dissolving a company because it gives an idea of what can be used to pay off debt and what may be distributed to the owners.
Valuation takes into account all business assets, earnings, debts, and losses. There are many different ways to value a company, and the method you use will likely depend on the size and amount of business activity. If this whole valuation thing makes your head spin, don’t hesitate to bring in a valuation expert.
Just because you’re closing your business doesn’t mean your debts go away. You must satisfy the company’s financial obligations before distributing any assets to the business owners. Failure to do this could mean personal liability for you and any other owners.
Take into account how much you owe and whom you owe it to. Again, bring in a professional if this is an area that makes you a bit uneasy.
Officially dissolving with the state is an incredibly important step in the dissolution process. Under Kentucky law, you’re required to formally dissolve your Kentucky business by filing the appropriate paperwork. The Secretary of State’s Division of Business Filings handles all business filings, including dissolutions.
You must file Articles of Dissolution in Kentucky to formally dissolve. The Secretary of State provides specific forms based on the entity type filing for dissolution. All filings may be submitted online, in person, or by mail. Make sure to include the appropriate filing fee, which is on the form, or else the office won’t accept your documents.
To dissolve a Kentucky LLC, you’ll need to include the LLC’s name, reason for dissolution, effective date of dissolution, and an authorized signature.
To dissolve a Kentucky corporation, the form you’ll use depends on whether the corporation is for-profit or nonprofit and who’s approving the dissolution. Nonprofit organizations must include the following information:
A for-profit corporation whose incorporators or initial directors are initiating the dissolution must include the corporation’s name, date of incorporation, affirmations about shares and business activities, and an authorized signature.
For-profit corporations who are dissolving based on a vote by the board of directors or shareholders must include this information:
The Secretary of State will send a stamped postcard to the principal office address on file as proof of receipt.
In most cases, business owners need to approve a Kentucky voluntary dissolution. Dissolution instructions are typically found in the business’s operating document. For LLCs, this is the operating agreement, and for corporations it’s called the corporate bylaws. If your company never adopted an operating agreement or bylaws, then you default to state law for instructions on how to dissolve a business in Kentucky.
If you’re still in the formation process of a Kentucky LLC, we can provide you with an Operating Agreement Template. We want you to feel confident knowing your operating agreement has the important information about your business operations, including dissolution procedures.
Regardless of what the operating agreement or bylaws say, you still must notify the state that you’re closing the business by submitting the proper dissolution paperwork.
To transact business in Kentucky, you need to obtain some combination of licenses, permits, registrations, and certificates. Agencies at the federal, state, and local levels are responsible for issuing these types of authorizations. Unless you cancel, some of your licenses or permits may automatically renew and result in a fee. It’s up to you to research the renewal and cancellation requirements for all permits, licenses, registrations, and certificates that your business has been issued.
This step may be the lengthiest one for you in the dissolution process. Especially if you were doing a lot of business, it’s likely you have more business matters to take care of before closing up shop. The IRS has a helpful article on closing a business.
Here’s an example of some legal and financial obligations you may have to handle:
If your business has employees, there are certain federal and state legal requirements for paying final wages and other earned benefits after the business closes. Consider hiring an accountant or tax advisor to be sure you’re satisfying all obligations to your employees.
Once you file the Articles of Dissolution with the Secretary of State, you have officially dissolved your company. At that point, it exists only to close out or “wind up” any remaining business affairs. For example, you may need to close your business bank account and distribute any remaining assets to yourself and other owners.
By now, we hope you feel more confident about the Kentucky business dissolution process. Although there are multiple steps to it, you can get through it smoothly by having your business documents organized and prepared. We have a team of experts ready to help you throughout the life of your business and into the next venture.
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 initiate a Kentucky voluntary dissolution, you need to get the proper approval based on what’s required in your business’s operating agreement. Then, to officially dissolve, you have to file Articles of Dissolution with the Secretary of State’s Division of Business Filings. From there you need to satisfy any legal and financial obligations of the company.
The cost to dissolve a Kentucky LLC depends on whether you hire professionals, such as lawyers or accountants, to help with the process.
You also have to account for the filing fees, which change from time to time. The most current fee amounts are included on the Articles of Dissolution forms.
The processing time for dissolution paperwork depends on the current workload of the Kentucky Division of Business Services. However, there are more steps to the dissolution process, such as valuing your business and winding up business affairs. The total time to dissolve your business depends on how long each step takes.
To dissolve a nonprofit organization, you need to file Articles of Dissolution in Kentucky with the Secretary of State’s Division of Business Filings. You can file the Articles of Dissolution online, in person, or by mail. Be sure to include the appropriate filing fee or else the Division of Business Filings won’t accept your paperwork.
Kentucky Business Resources
Business Dissolution by State