Are you ready to stop doing business with your Alabama corporation, but you’re not sure how the official dissolution process works?
The state of Alabama requires corporations to file documentation of a dissolution, which can differ depending on a couple of key factors. What are these factors, and what does the dissolution process include? In this guide to dissolving an Alabama corporation, we’ll break down all the relevant details.
If at any point you need help, you can use a service like Incfile or Northwest Registered Agent to handle the process for you.
Guru Tip: Most company formation services are also able to dissolve your entity for a small fee. They’ll take care of the paperwork so you can move on. Two popular options are LegalZoom and Incfile.
What Does It Mean to Dissolve a Corporation?
In any state, there is a series of steps that needs to be followed in order to properly dissolve a corporation. While this process does vary some from state to state, for the most part it’s necessary to follow this basic plan (unless your corporation has not yet issued shares or started doing business, which we’ll get to shortly):
- Hold a board of directors meeting and formally move to dissolve your corporation. The resolution to dissolve must be agreed upon by a majority of the corporation’s directors. Depending on your corporation’s structure, you may then need to take the vote to your shareholders. Either way, it’s important to take detailed records of this process for your corporate record.
- Fill out and file the Domestic Business Corporation Articles of Dissolution with the Office of the Judge of Probate in the county in which your business is located.
- Fulfill all tax obligations with the state of Alabama, as well as with the IRS.
- Cancel any relevant licenses and permits, along with closing your business bank account.
- Notify customers, vendors, and creditors of your dissolution.
Most of these steps are fairly self-explanatory, but where many corporation owners run into some confusion is when it comes to the Articles of Dissolution. With that in mind, let’s dive into the details of this step.
How to Dissolve an Alabama Corporation by the Board of Directors
Most corporations must be dissolved by the board of directors, and we discussed the necessity of holding a meeting to reach this resolution in the previous section.
In the state of Alabama, you’ll need to fill out and file a document known as the Domestic Business Corporation Articles of Dissolution. This form requires the following information:
- Name of your corporation
- Alabama entity ID number
- Applicant’s name and address
- Date of dissolution
- Nature of dissolution (board of directors, written consent of shareholders, etc.), including attached documents if applicable
- Signature
- Payment method
Once you’ve finished filling out your Articles of Dissolution, you’ll send one original signed document and two additional copies to the Office of the Judge of Probate in the county in which your corporation is located. You will need to contact this office to determine the fees required at the county level. In addition, you must include a separate $100 check made payable to the “Secretary of State.” The Office of the Judge of Probate will forward a copy of this form and payment to the Secretary of State’s office.
Typically, you can expect the Office of the Judge of Probate to forward the Articles of Dissolution within 10 business days, and you can expect the entire process to take about two weeks.
How to Dissolve an Alabama Corporation by the Incorporators
Sometimes, entrepreneurs need to dissolve their corporation before shares are issued or any business is transacted. In this situation, the incorporator will need to take responsibility for dissolving the corporation.
The process for dissolving an Alabama corporation by the incorporators is no different than the process for the board of directors. You will need to file the Domestic Business Corporation Articles of Dissolution with the Office of the Judge of Probate (one original and two copies) in the county in which your corporation is located.
You will also need to contact the Office of the Judge of Probate to determine the fees you must pay to the county, and include a $100 check made payable to the “Secretary of State.”
What Else Do I Need to Know About Dissolving a Corporation in Alabama?
The moment the state of Alabama dissolves your corporation, your business name becomes available for anyone who wants to use it. This is one of the reasons that you should never dissolve a corporation until you’re absolutely certain that you will no longer conduct business in this state.
There’s also the issue of administrative dissolutions to discuss. This is when the state dissolves your corporation without you requesting that they do so. In Alabama, this can happen for any of the following reasons:
- Franchise taxes that have been unpaid for at least 6 months
- Failing to file an annual report with the Secretary of State for at least 6 months
- Failing to maintain a registered agent for 60 days or more
- Failing to notify the Secretary of State of a change in registered agent for 60 days or more
- The period of incorporation has expired
it can be a real hassle to reinstate your corporation, because you essentially need to start from scratch in this state. You must file your formation paperwork as a new corporation, and pay all of the associated fees.
Conclusion
The process to dissolve an Alabama corporation is very simple, but it is definitely not a decision to take lightly, since you will refile the formation paperwork in order to revive your corporation.
Either way, it’s crucial that you complete each step discussed in this guide accurately, because you certainly don’t want to run into any issues with the dissolution process.
We hope this guide helped you answer any questions you might have had about dissolving an Alabama corporation!