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Closing your business: Dissolution may help avoid fines and fees

Closing a North Dakota business typically has legal and financial implications. Putting up a closed sign and ceasing operations is only one side of the equation. If your company has fulfilled its purpose, you want to retire but have no buyer, or there is no need to stay open, dissolving it is a simple way to close it down legally.

According to Guidant Financial, business dissolution terminates a business with the state. Even if your company ceases operations, your business remains registered with the North Dakota Tax Department. As a registered business, it must pay taxes and file reports. Failure to do so may result in recurring fees and penalties.

Prepare for dissolution

Before you get the articles of dissolution and submit them, there are a few items to attend to first. If your business is a corporation, schedule an official meeting with the board of directors and take an official vote by the majority shareholders approving the dissolution. You may continue with the dissolution process if they vote “agreed.” However, if they do not, you may have to go through liquidation or find a buyer for the business.

The process of dissolving an LLC is similar to that of a corporation. Members must vote for the dissolution. A record of the vote and the dissolution must become part of the LLC operating agreement.

Steps involved in a dissolution

Before you can legally dissolve your business, you must take the following steps:

  • Distribute all remaining entity assets
  • Close all bank accounts
  • Cancel all business licenses and permits
  • File IRS form 966
  • Cancel the IRS account associated with the entities Federal Tax ID number
  • Publish a notice of dissolution

The ND Secretary of State generally takes four to five weeks to process the Articles of Dissolution. Proper planning and attending to the legal details of dissolving your business can help you avoid fees and fines.