Are you ready to stop doing business with your Illinois corporation, but you’re not sure how the official dissolution process works?
The state of Illinois 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 Illinois 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.
- File the Articles of Dissolution with the Illinois Secretary of State.
- Fulfill all tax obligations with the state of Illinois, 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 Illinois 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.
Once the decision to dissolve has been made, you will need to file the Articles of Dissolution (Form BCA-12.20) in duplicate with the Secretary of State. This is a relatively simple form that only requires the following information:
- Corporate name
- Mailing address for service of process
- Date of dissolution authorization
- Who authorized the dissolution
- List of any distributed or cancelled shares
- Title and signature of authorized representative
In addition to this form, you will need to include a check for $5 made payable to the “Secretary of State.” You can send two copies of the Articles of Dissolution and the check to the following address:
Secretary of State
Department of Business Services
501 S. Second St., Rm. 350
Springfield, IL 62756
The corporate dissolution process takes about 7-10 business days from the date that the paperwork is filed.
How to Dissolve an Illinois 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 a corporation by the incorporators is the same as it is for the board of directors. You will still need to file the Articles of Dissolution (Form BCA-12.20) in duplicate with the Secretary of State.
You will also need to pay the same $5 processing fee, with the check made payable to the “Secretary of State.” The paperwork and payment can be mailed to the same address:
Secretary of State
Department of Business Services
501 S. Second St., Rm. 350
Springfield, IL 62756
In addition, you will need to wait 7-10 business days for the Secretary of State to process the dissolution paperwork.
What Else Do I Need to Know About Dissolving a Corporation in Illinois?
As soon as you dissolve your corporation with the Secretary of State, your name is available to be claimed by other individuals or businesses. Therefore, you should only voluntarily dissolve your business if you have no intention of reviving the business under the same name in the future.
You should also be aware of administrative dissolutions. This is when the state dissolves your corporation without your consent. Administrative dissolution can occur if you do not file your annual report within 90 days of the due date.
In order to reinstate an administratively dissolved business, you will need to pay $200 and file the Application for Reinstatement with the Secretary of State. You will also need to contact the Corporate Documents Office to determine if your corporation owes any taxes or penalty fees.
Conclusion
Dissolving a corporation is pretty straightforward in Illinois. The form is simple and the process is inexpensive. In addition, it takes less than two weeks for the Secretary of State to process the forms, whether you have distributed shares or not.
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 Illinois corporation!