As an experienced Massachusetts business owner, you may have any number of reasons for dissolving a business. You may want to retire or change careers. Or you may need to close your doors to avoid bankruptcy. No matter what your financial situation, proper dissolution of your business is extremely important to your future success.  An improperly closed Massachusetts business may still be expected to file tax returns and other state filings.

If you fail to properly dissolve your Massachusetts business, you might also be subject to fines or financial penalties. It could also negatively impact business owners’ or members’ credit and future business ventures. We’ve compiled some helpful information about how to dissolve a business in Massachusetts so you know what to expect.

We can also help you get ready to launch your next business. Our fast, easy Massachusetts limited liability company (LLC) Formation Service and Massachusetts Incorporation Formation Service have helped business owners like you get up and running sooner. We can help your Massachusetts business from day one onward.

Before dissolving your Massachusetts business

Work now saves work later when you go to dissolve your Massachusetts business. You’ll need to have a clear record of your business information to prevent any issues in closing your doors. If you don’t have a comprehensive list of all of your assets and liabilities, you may encounter difficulty in finalizing your business’s dissolution. Don’t put yourself in that situation. This is one reason why keeping a secure and thorough record of all business dealings throughout the life of your enterprise is important.

Step 1: Establish a valuation of your Massachusetts business

When dissolving your business, you’ll need to value your real estate, inventory, assets, and anything else that might have value. If you’re not sure how to do this you can hire a professional. If you haven’t done this already, you’ll need to gather all documents related to business operations. Focus especially on locating your contracts with third parties and your tax information.

If you’re feeling overwhelmed, our Worry-Free Compliance Service can help you throughout the life of your Massachusetts business. Our well-designed dashboard keeps your business documents organized to make gathering dissolution information easier.

Step 2: Compile a full account of your Massachusetts business’s debts 

To dissolve your Massachusetts business, you’ll need to understand your company’s debts. Most states require you to confirm that you don’t owe any creditor money before you’re allowed to dissolve your business. Just because you are 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
  • Creditors attempting to pierce the corporate veil to locate your personal assets
  • Creditors preventing or delaying the dissolution of your Massachusetts business

As you can see, it’s very important to understand what your business owes as you begin the process of closing your doors.

Step 3: Identify Massachusetts’s official dissolution document

To dissolve your Massachusetts LLC, you’ll need to file a Certificate of Cancellation. Some information you’ll be asked about when you file the certificate includes:

  • Your EIN
  • Your company name
  • The date you filed your original certificate of formation
  • The reason for filing the certificate of cancellation
  • The date you want your certificate of cancellation to be effective
  • Any other business information requested or required

You will file this online with the Massachusetts Corporations Division. 

The process for dissolving your Massachusetts corporation is very similar. Once you’ve made sure all your annual reports and other documents have been filed, you can file Articles of Voluntary Dissolution. These can be submitted online through the Corporations Division portal. You can also download and complete a paper form and submit it by mail.

Step 4: Follow instructions in your Massachusetts business’s operating document

Your company’s own governance documents can be a great guide to a relatively pain-free dissolution. You can refer to your LLC’s operating agreement or your corporation’s bylaws for both operating as well as dissolution instructions. 

To help in your business journey, we can provide LLCs with a California operating agreement template. This template can help you customize an operating agreement for your business during the formation process. Having a high-quality operating agreement that’s been tailored to your business makes dissolution easier.  But no matter what your governance documents say, you must still file the proper dissolution paperwork with the state.

Step 5: Cancel your Massachusetts business’s permits, licenses, and registrations

When you formed your Massachusetts business, you likely also applied for and received federal, state, and local permits or licenses. As you close your doors, 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. 

As you wind up your affairs, confirm that you understand state and local employment obligations if you have employees. Don’t be afraid to ask for employment law advice from trusted counsel. Some cities have specific rules that employers must follow. Often, this depends on the size and type of your workforce. Be certain you understand the rules, since any misunderstanding can delay your ability to dissolve your Massachusetts business.

You’ll also need to file final tax returns and any outstanding Massachusetts corporate reporting. For taxes, 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 a Certificate of Cancellation or Articles of Voluntary Dissolution for your Massachusetts business

Once you’ve settled your debts, filed your taxes and any other reports, and said goodbye to any remaining employees — then you can file the Certificate of Cancellation or Articles of Voluntary Dissolution. You’ll need to file the Certificate of Cancellation online with the Corporations Division. However, you can file the Articles of Voluntary Dissolution online or by mail.

We are here to help you with your Massachusetts business’s needs

Our specialty is helping you with your Massachusetts business needs, from day one through dissolution. When you’re ready for your next venture, we can help you quickly and efficiently form your LLC or corporation. Our Worry-Free Compliance service has helped many business owners keep track of their business documentation and compliance requirements. Our dashboard helps make transitions through the different phases of business a breeze. Whatever your business needs are, we’re here to help you.

Dissolution FAQs

  • You’ll need to file either a Certificate of Cancellation or Articles of Voluntary Dissolution, depending upon your entity type.

  • Costs vary depending upon the complexity of your business and the types of services you engage to help you wind down. The most current filing fees for each required form in the dissolution process are listed by the Corporations Division.

  • It depends upon a variety of factors, like whether you file online or by mail, and whether all your documents are in order.

  • Check with the Massachusetts Attorney General’s Office Non-Profit Organization / Public Charities Division. They’ll be able to provide you useful information specific to your Massachusetts nonprofit organization.

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.

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Written by Team ZenBusiness

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