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 Tennessee.
What It Means to Dissolve a Tennessee 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 Secretary of State in Tennessee to file the necessary documents for the dissolution of your corporation; these documents will be discussed below.
- Next, you have to complete all of the IRS tax requirements with the State of Tennessee.
- 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 with the documents needed for the dissolution process which will be discussed further in the section below.
Dissolving a Tennessee 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 Tennessee that have initiated business and have already issued shares, they need to first dissolve and then later terminate their businesses. Both processes can be done simultaneously or differently.
To dissolve a corporation in Tennessee, file for the Dissolution Written Consent that will show that all the shareholders have resolved to dissolve the business. The next document is the Articles of Dissolution.
When filling up the Articles of Dissolution, you will need to put in some information. 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 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.
To finalize the dissolution of a corporation in Tennessee, you’ll have to complete the Business Termination Process in addition to the Business Dissolution process stated above. You’ll start the Business Termination process by filing for a Termination Written Consent and the Articles of Termination of Corporate Existence.
You’ll be required to pay a filing fee of 20 dollars for each of the Articles of Dissolution and the Articles of Termination, which makes 40 dollars in total. You can choose to pay the filing fees at once or in installments. However, whichever choice you make, you’ll need to write a check of the among you’re paying at that point in time. The check should be payable to “Tennessee Secretary of State”. After you have completed all the information needed on each of the required documents, you’ll mail the documents and the check you have written to the address:
Tennessee Department of State
312 Rosa L. Parks Avenue
6th Floor, William R. Snodgrass Tower
Nashville, TN 37243
Normally, It’ll take between 3 to 5 working days for the Tennessee Secretary of State to process the dissolution of your corporation.
Dissolving a Tennessee 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 Tennessee that have not yet issued shares or had any business transaction, you will need to follow similar but simpler steps like the one above. You’ll be filing for just a document that will take care of both the dissolution and Termination processes of your business in Tennessee. The document is the Incorporators’/Initial Directors’ Articles of Dissolution and Termination, it does not need specific information as the Articles of Dissolution and Articles of Termination mentioned above. However, it requires similar information.
The filing fee, in this case, is a sum of 20 dollars only which would be paid with the same process described above. You’ll also submit the documents to the address above and follow the same steps explained above. The duration of time it takes is the same as above.
Dissolving a Corporation in Tennessee: Other Things You Should Know
You can’t claim your business name after you have filed for a voluntary business dissolution. In essence, the name of your business is made available to anyone that wants to make use of it.
There are some instances wherein Tennessee State will be the one to initiate dissolution. This is known as administrative dissolution or involuntary dissolution.
This can happen, for example, if a corporation or a company refuses or fails to submit its annual reports by the deadline. In a case like this, you’ll need to apply for reinstatement and follow the other instructions to continue your business operations in the State of Tennessee.
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 Tennessee.
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 Tennessee.