Are you ready to stop doing business with your Maryland corporation, but you’re not sure how the official dissolution process works?
The state of Maryland 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 a Maryland 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.
- Contact the Department of Assessments and Taxation to ensure that there are no delinquent property returns or unpaid penalty fees before filing the Articles of Dissolution.
- Fulfill all tax obligations with the state of Maryland, 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 a Maryland 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 Maryland, you will need to contact the State Department of Assessments and Taxation (SDAT) to ensure that all of your property returns are current and no fees remain unpaid. If there are no delinquent returns or unpaid fees, you can proceed with filing the Articles of Dissolution. You are not required to use the forms supplied by the state. If you prefer, you can draft your own Articles of Dissolution. Either way, you will need to provide the following information:
- Corporation name
- Principal office address
- Name and address of the resident agent
- Names and addresses of corporate directors
- Name, title, and address of each of the following positions:
- President
- Secretary
- Treasurer
- Affirmation of the process of dissolution authorization
- Affirmation that the corporation has no known creditors OR the date on which notice of approved dissolution was sent to any known creditors
- Affirmation that the corporation is hereby dissolved
- Any additional information related to the dissolution (if needed)
- Signature of the secretary/assistant
- Signature of the president/vice president
- Signature of the resident agent
Once you have contacted SDAT, contacted any of your corporation’s creditors to notify them of your dissolution (must be done at least 20 days prior to filing), and filled out the Articles of Dissolution, you will need to include payment of $100, with checks made payable to the “State Department of Assessments and Taxation.” You can also expedite your filing by paying an additional $50.
If you file in person, you are required to pay the expedited fee for same-day processing. Traditional mail filing generally takes 8-10 weeks to process, while expedited mail filing takes about a week.
You can deliver or mail the Articles of Dissolution and payment to the following address:
State Department of Assessments and Taxation
Charter Division
301 W. Preston Street; 8th Floor
Baltimore, MD 21201-2395
How to Dissolve a Maryland 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.
If your corporation has not commenced business or distributed shares, you will still need to file the Articles of Dissolution in order to dissolve. However, in addition to the information outlined above, you will also need to attach a statement affirming that one of the following is true:
- The corporation is dissolving before the organizational meeting OR
- The corporation is dissolving after the organizational meeting but before the issuance or subscription of stock
Once you are finished filling out the Articles of Dissolution and providing one of the above statements, you will need to include payment of $100, plus $50 for expedited service (this fee is required if you file in person). Checks should be made payable to the “State Department of Assessments and Taxation.”
The Articles of Dissolution and payment can be delivered or mailed to the same address:
State Department of Assessments and Taxation
Charter Division
301 W. Preston Street; 8th Floor
Baltimore, MD 21201-2395
If you file in person, your dissolution will be processed on the same day, however, if you file by mail, you can expect to wait between 8-10 weeks for traditional filing, or one week for expedited filing.
What Else Do I Need to Know About Dissolving a Corporation in Maryland?
There is no name protection for voluntary dissolutions in Maryland. In other words, if you choose to dissolve your corporation, you lose claim to your business name as soon as the dissolution is processed.
However, you can rescind a corporate dissolution before SDAT approves your application, in which case you can continue conducting business under the same name.
It is also important for Maryland corporations to be aware of administrative dissolutions. An administrative dissolution occurs when a corporation fails to file its annual report, and subsequently fails to file and pay the penalty fees after receiving the Final Forfeiture Notice.
If your corporation is administratively dissolved, you will need to submit any delinquent annual reports (and pay the $300 filing fee per report), before filing the Articles of Revival with SDAT.
Conclusion
Whether your corporation has been in existence for years or you have yet to commence business, the process for dissolving your business is relatively simple in Maryland. However, you should not take this decision lightly, as the window to rescind a corporate dissolution is relatively brief, and the reinstatement process can be expensive.
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 a Maryland corporation!