Steps to Dissolve Your Maryland Business
- Establish a valuation of your Maryland business
- Compile a full account of your Maryland business’s debts
- Identify Maryland’s official dissolution document
- Follow instructions in your Maryland business’s operating document
- Cancel your Maryland business’s permits, licenses, and registrations
- Wrap up your Maryland business’s legal and financial obligations
- File Articles of Cancellation or Dissolution for your Maryland business
Choosing to dissolve your Maryland business is one of the most difficult choices you’ll make as a business owner. You may need to close your doors to avoid bankruptcy, or maybe you want to retire or open a new venture. Regardless of your personal or financial situation when you make the decision to close, proper dissolution of your business is extremely important to your future success. If your business isn’t properly dissolved, the state may still expect you to file taxes and complete all your other routine filings.
There may also be fines or financial penalties if you don’t properly dissolve your Maryland business. It could negatively impact business owners’ or members’ credit and other business ventures. We’ve compiled some helpful information to ease the confusion around how to close a business in Maryland so you know what to expect.
And as you get ready for your next business venture, we can help you prepare with our fast, easy Maryland limited liability company (LLC) and Maryland incorporation services. We can help make doing business in Maryland easy through the entire life of your business.
Before dissolving your Maryland business
As you take all the preparatory steps to dissolve your Maryland business, you’ll need to have a clear record of all business information to prevent any issues in dissolution. If you don’t have a record of all of your assets and liabilities, you may encounter difficulty in your Maryland voluntary dissolution. Don’t put yourself in that situation. This is why keeping a secure and thorough record of all business dealings is important. Next, we’ll walk you through some of the key types of information needed before filing dissolution papers with the state.
Step 1: Establish a valuation of your Maryland business
When dissolving your Maryland business, you’ll need to value your real estate, inventory, assets, and anything else of value within your business. You can hire a professional appraiser if you’re not sure how to value something. To dissolve a Maryland business, you also need to gather all documents related to business operations. Your contracts with third parties and your tax information are going to be especially important in the dissolution process.
Our Worry-Free Compliance service can help you throughout the life of your Maryland business. Compliance isn’t just for your operating phase — we can help you close your Maryland business as well. Our ZenBusiness dashboard keeps your business documents organized to make gathering dissolution information easier.
Step 2: Compile a full account of your Maryland business’s debts
An essential part of how to dissolve a Maryland business is understanding your company’s debts. Just because you’re closing your business doesn’t mean debts disappear. Possible legal repercussions for not handling your company’s outstanding debts include:
- Creditors holding members and owners of the company personally liable for the company’s debts during dissolution
- Creditors holding you personally liable if debts aren’t paid before the company is wound up
- Creditors attempting to pierce the corporate veil to locate your personal assets to pay for the company’s debts and liabilities
- Creditors delaying the business’s closure
As you can see, it’s very important to understand your business’s debts and liabilities as you go to close your doors. Having a handle on this information will help ease the process as you dissolve a Maryland corporation or LLC.
Step 3: Identify Maryland’s official dissolution document
To dissolve a Maryland LLC, you’ll need to file a document called Articles of Cancellation with the Maryland State Department of Assessments and Taxation (SDAT). To dissolve a Maryland corporation, you’ll need to file Articles of Dissolution, which is basically the same thing, just specific to a corporate entity.
In both cases, you need to confirm to the SDAT that you’ve filed all of your tax returns. You may also need to confirm that there are no known creditors of your company. After the paperwork is filed, the process usually takes about 8-10 weeks for the closure of your Maryland business to be final.
Step 4: Follow instructions in your Maryland business’s operating document
Your Maryland company’s internal governance documents can be a great guide to a successful dissolution. You can refer to your LLC’s operating agreement or your corporation’s bylaws for dissolution instructions. We can provide LLCs with an operating agreement template to help you customize an operating agreement for your business during the formation process. Having a high-quality operating agreement that has been tailored to your business makes dissolution easier. But remember, no matter what your governance documents say, you must still file the proper dissolution paperwork with the state. Be sure to check with SDAT in the event that any of their paperwork requirements directly contradict your articles or bylaws.
Step 5: Cancel your Maryland business’s permits, licenses, and registrations
When you started your Maryland business, you probably also applied for a variety of federal, state, and local permits or licenses. As you close your Maryland business, you’ll need to terminate those licenses. Some permits and licenses renew automatically each year, so make sure you know renewal dates. Cancel licenses as soon as you are reasonably able to do so. You don’t want to be stuck with costly renewal liabilities as your business shuts down. Or worse, be fined or unable to close up shop because you cancelled a permit too soon!
Step 6: Wrap up your Maryland business’s legal and financial obligations
As you close your Maryland business, consider whether you may have employment law obligations. Some municipalities have specific rules that employers must follow when terminating their workforces even if the state doesn’t have any broad regulations. There may also be rules related to real estate and zoning if you’re closing down a physical location. Be certain you understand the rules, since any misunderstanding can delay your ability to dissolve your Maryland business.
You also need to file final tax returns. This includes both state and federal returns, if applicable. Once that’s complete, you’ll be able to cancel the business’s EIN.
Step 7: File Articles of Cancellation or Dissolution for your Maryland business
Once you’ve settled all the debts, cut the last paycheck, and filled out the final tax return, then you can file the Articles of Cancellation or Dissolution. You can file it by mail with the Maryland SDAT.
Let us help you keep your business compliant with Maryland law from day one till you close your doors
We can help keep your business compliant, from the first day you open your doors until the day you move on to your next adventure. We can help you quickly and efficiently form your LLC or corporation. Our Worry-Free Compliance service has also helped many business owners keep track of all their business documentation, making transitions through the different phases of business a breeze. Whatever your business needs are, we’re here to help you.
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 Maryland?
You must file Articles of Dissolution or Cancellation, depending upon your business entity type.
- How much does it cost to dissolve an LLC in Maryland?
It depends upon the type and complexity of your business. Filing the paperwork typically costs only a small fee plus postage. It may cost more if you select expedited filing.
- How long does it take to dissolve an LLC in Maryland?
In addition to wondering how to dissolve an LLC in Maryland, you may wonder how long it takes. The process can take 8-10 weeks once the documentation is received by the State Department of Assessments and Taxation.
- How do I dissolve a nonprofit organization in Maryland?
The process for dissolving a nonprofit organization is very similar to dissolving a for-profit entity. Check with the SDAT for the most updated information you might need to supplement your entity’s dissolution paperwork.