There are several reasons for dissolving a corporation. It could be due to bankruptcy, an internal dispute, among other reasons.
Suppose you are a business owner and decide to cease your business’s operation. In that case, there are many things that you have to do before your corporation is officially out of business. You don’t just simply stop and then disappear.
With that said, here are the things you should know when dissolving a corporation in New Mexico.
What It Means to Dissolve a New Mexico Corporation
There are some steps a business owner must follow to dissolve his corporation. There may be a few differences between the processes in different states, but most of the steps are similar. Despite the variations of the steps in other states, you must follow the steps below.
- The first step in dissolving a corporation is to hold a board meeting with all the board members present. They all must be aware of the initiative to dissolve the corporation.
Despite the initiative, there must still be a resolution in which most of the board members approve to dissolve the corporation. The shareholders may also need to take part in the voting, but that depends on your organization’s structure. This process must be thoroughly recorded and then stored in the corporate record.
- After this, proceed to the New Mexico Secretary of State to file the Articles of Dissolution and other forms which will be discussed below.
- Next, you have to complete all of the IRS tax requirements with the State of New Mexico.
- After this, all your business licenses and permits must be canceled, and all your business bank accounts must be closed.
- Lastly, concerning your employees, vendors, customers, and everyone who has a connection to the company, notify them of the initiative to dissolve the company.
These steps are easy enough to understand, and you should have no trouble going through with each of them. The only step in this process, which causes the most confusion and is the most complex, is the Articles of Dissolution which will be discussed further in the section below.
Dissolving a New Mexico Corporation by the Board of Directors
As discussed above, the first step of dissolving a corporation is by holding a meeting and informing all board members of the plan to dissolve the company.
For those corporations in the state of New Mexico that have initiated business and have already issued shares, they need to file for some forms, you should start by filing the Application for Tax Clearance and Statement of Intent to Dissolve with the Secretary of State in New Mexico. After filling these documents, they will then file for the Articles of Dissolution.
When filling up this form, you will need to put in some information for the forms you’ll be submitting. This includes the following:
- the name of your corporation
- the names, addresses, and the positions held by the corporate officers
- the date of the authorization of the dissolution
- the addresses and names of the corporate directors
- the date to which the dissolution was filed
- the date to which the dissolution will be effective
- the signature of the representative authorized by the company.
After you have successfully filed the Application for Tax Clearance and Statement of Intent to Dissolve with the Secretary of State in New Mexico, you’ll receive some documents, these are: a clearance letter, a no-tax due certificate, and a certificate of compliance. You’ll not be required to make any payment (filing fee) for the tax clearance application. However, the Intent to dissolve statement requires a 50 dollars filing fee.
You must file all the documents you receive from the New Mexico Secretary of State alongside the Articles of Dissolution should be mailed or delivered in-person to the address:
New Mexico Secretary of State
325 Don Gaspar, Suite 301
Santa Fe, NM 87501
It may take about 15 days for the New Mexico Secretary of State to process the Articles of Dissolution. However, the Intent to Dissolve statement and Tax Clearance Application may take different processing times.
Dissolving a New Mexico Corporation by the Incorporators
There are instances wherein a corporation is dissolved before issuing the shares or before any business transaction has ensued. In these cases, it is the incorporator’s responsibility to spearhead the initiative of dissolving the corporation.
For all those corporations in the State of New Mexico that have not yet issued shares or had any business transaction, you will need to file for another version of the Articles of Dissolution. The documentation process and submission are the same as explained above.
Dissolving a Corporation in New Mexico: Other Things You Should Know
You can’t claim your business name after you have filed for a voluntary business dissolution. In essence, your business name can be claimed by someone else.
There are some instances wherein the New Mexico state will be the one to initiate dissolution. This is known as administrative dissolution or involuntary dissolution.
This can happen if a corporation or a company refuses or fails to submit its annual reports by the deadline. If you are subjected to involuntary dissolution, you have the option to reinstate your business.
Whether you plan on dissolving your corporation, which has already issued shares and has started making business transactions, or a corporation that hasn’t commenced business yet, the process remains the same in the state of New Mexico.
The only significant difference is in the form that you need to file. Hopefully, this article has been a great help to you in dissolving your corporation in the State of New Mexico.