Steps to Dissolve Your Tennessee Business
- Establish a valuation of your Tennessee business
- Compile a full account of your Tennessee business’s debts
- Identify Tennessee’s official dissolution document
- Follow instructions in your Tennessee business’s operating document
- Cancel your Tennessee business’s permits, licenses, and registrations
- Wrap up your Tennessee business’s legal and financial obligations
- File the Articles of Dissolution or Notice of Dissolution for your Tennessee business
When people start a business, they often don’t think about how to dissolve a business at that time. After all, starting your own business takes a lot of hard work. So why think about how to dissolve a Tennessee business when you’re just getting started?
The fact remains that many businesses, even the most successful, will have to close one day. In fact, there are many reasons why this might occur:
- When owners want to retire
- To avoid bankruptcy
- To start an entirely new business venture
No matter the reason, it’s important to at least have a basic understanding of the process to dissolve a business in Tennessee, whether that be to dissolve a Tennessee LLC or dissolve a Tennessee corporation.
This is especially important in light of the fact that failure to properly dissolve and wind up the business can result in:
- Continued tax liability and reporting requirements
- Negative impacts on credit of individual owners
- Possible fines and other financial penalties for both the entity and its owners
- Negative impact on potential future business ventures
Thus, make sure to properly dissolve your Tennessee business if and when the time comes.
Looking to make the dissolution process easier? One of the best ways to do so is to ensure that your business is properly formed from the outset and that it stays in compliance with state laws throughout its lifetime. Need help forming your Tennessee business? Use our Tennessee LLC Formation Service or Corporation Formation Service to get started on the right foot.
Before dissolving your Tennessee business
Before even beginning the Tennessee voluntary dissolution process, there are a few steps you can take to make this as smooth and efficient as possible.
For example, it’s strongly recommended to establish a thorough and secure record of all corporate or LLC business dealings and transactions from the duration of the business lifespan. While it might seem tedious to gather all this information, doing so can often save a great deal of time and effort later on down the line.
Step 1: Establish a valuation of your Tennessee business
The first official step to dissolve a Tennessee business is to establish a valuation for the entity.
However, be sure to obtain not just any valuation — rather, you’ll want this valuation to be as accurate as possible.
To do so, gather as much information about the business’s assets as you can, including:
- Real estate
- Equipment owned by the business
Additionally, make sure to compile any documents related to your business operations, including contracts with third parties and tax information. All this will be crucial to establishing an accurate and comprehensive valuation for your Tennessee business.
If you’re ever uncertain about how to value certain aspects of the business, don’t be afraid to hire a professional who can assist. It’s always best to err on the side of caution and consult with someone well-versed in business valuations to give you an unbiased and accurate opinion.
Feeling overwhelmed? Don’t worry. You can use our Worry-Free Compliance Service and dashboard to organize your business and make gathering your information easier and more streamlined.
Step 2: Compile a full account of your Tennessee business’s debts
Though you may feel tempted to write off and forget about your business debts, this will prevent you from obtaining an accurate picture of where your business stands financially. Moreover, failure to pay off company debts can result in financial consequences and legal liability for the business entity and sometimes even its individual owners.
Thus, always be sure to verify what debts your company owes to whom. Then, make sure to pay off those debts. Remember — just because you’re closing up your business doesn’t mean your business debts go away.
Step 3: Identify Tennessee’s official dissolution document
In Tennessee, the documents required to dissolve a Tennessee business are called the Articles of Dissolution for corporations and a Notice of Dissolution for limited liability companies (LLCs). The appropriate document must be filed with the Tennessee Secretary of State, Division of Business Services.
For the most efficient filings and payment processing, you can file your dissolution paperwork with the Tennessee Secretary of State online. Alternatively, however, you can also print the appropriate form and submit your dissolution filings by mail.
Step 4: Follow instructions in your Tennessee business’s operating document
If your LLC or corporation has an operating agreement or corporate bylaws, respectively, you must follow any included instructions for dissolution. Failure to do so may result in liability or in-fighting among owners of the business.
If your business doesn’t have any governing document that addresses how to dissolve your Tennessee business, you must instead follow any applicable default rules under state law.
While there’s nothing wrong with following the default dissolution rules under Tennessee law, doing so may not always be what’s most beneficial for the particular needs of your business. Thus, the best way to ensure a clear and fair process for dissolution, as well as manage other important aspects of the business, is often to have comprehensive governing documents in place that are tailored to your business’s needs and goals.
Don’t have an operating agreement for your LLC? Use our Operating Agreement Template to help you get started.
But as always, remember that no matter what your governing documents say, you must still file the proper dissolution paperwork required by the State of Tennessee to effectively dissolve the business.
Step 5: Cancel your Tennessee business’s permits, licenses, and registrations
When you start your business, you may come to discover that you’ll need certain licenses, permits, and registrations before you can legally operate within the state. In fact, there are many business licensing requirements at the federal, state, and local levels. Further, most of these require fees and periodic renewals, many of which may be set to auto-renew.
However, once you dissolve your Tennessee business, you’ll no longer need the licenses or permits you previously obtained. Therefore, it’s always a good idea to check for and cancel any that you don’t need after you’ve successfully dissolved the business.
Step 6: Wrap up your Tennessee business’s legal and financial obligations
As you near the end of the dissolution process, you’ll also want to ensure that you properly wrap up any remaining legal and financial obligations. For example, you may need to:
- Make final payments in compensation or other earned benefits in accordance with state and federal laws to any employees of the business
- File final tax returns for the entity at both the state and federal levels
- Cancel your Employer Identification Number (EIN)
Tying up these and any other loose ends is crucial to legally dissolving your Tennessee business.
Step 7: File the Articles of Dissolution or Notice of Dissolution for your Tennessee business
Finally, you’re ready to file the Articles of Dissolution or Notice of Dissolution for your corporation or LLC respectively. Additionally, don’t forget to pay the appropriate filing fee.
If you want your dissolution paperwork to take effect on some future date, make sure to note that in your dissolution paperwork. However, this delayed effective date can’t be later than 90 days after the date of filing. Otherwise, the default effective date will be the date of filing with the Secretary of State.
We’re here to help throughout the life of your Tennessee business
Dissolving your business may seem emotional and overwhelming. However, using the steps in this guide can help to simplify the process. Most businesses recognize the importance of properly forming their entity, but the dissolution process is just as important. Accordingly, make sure you know how to navigate the process.
Regardless of where you are in the business lifecycle, we’re here to help. Learn more about our services, and see what we can do to help you start, manage, and grow your Tennessee business today.
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 Tennessee?
To dissolve your Tennessee business, you’ll need to file Articles or a Notice of Dissolution with the state. However, by gathering the requisite information and getting your affairs in order before it’s time to file, you can greatly simplify the process.
- How much does it cost to dissolve an LLC in Tennessee?
Filing fees are subject to change and may vary depending on the form you have to file. Thus, check with the state before you file for the most up-to-date fee information.
- How long does it take to dissolve an LLC in Tennessee?
In most cases, the dissolution takes effect upon filing unless an alternate future date is noted in the Articles or Notice of Dissolution.
- How do I dissolve a nonprofit organization in Tennessee?
Nonprofit corporations in Tennessee must also file Articles of Dissolution to dissolve their Tennessee business. However, there is a slightly different form that they must use.