Are you looking to go in another direction with your business aspirations? Are you looking to take a step back from business altogether? Are you moving to another state to continue business there? These are all questions that, if answered “YES!”, require you to research how to ensure your business is legally dissolved.
When you want a “divorce” from your business, for any reason, you should always ensure that it is legally recognized in Georgia. This process can differ depending on what type of entity your business is. While a corporation or a limited liability company may be involuntarily dissolved by the court, or administratively dissolved for reasons such as failing to file an annual registration, this blog post will specifically cover voluntary dissolution – when you, as a business owner, would like to end your business operations intentionally and legally.
The answer to this question, of course, turns on what type of business you have! For the purpose of this blog, we will cover the basics of dissolving four of the most common types of businesses: sole proprietorships, general partnerships, limited liability companies, and corporations.
The dissolution process for these two business types is, unsurprisingly, quite simple. Because sole proprietorships and partnerships do not require any official filings with the Georgia Secretary of State (GA SOS) to begin the business, they do not need any similar filings to cease business either!
In order to ensure that all loose ends are tied, owners of a sole proprietorship or partners in a partnership should pay any outstanding debts and close any and all accounts that are tied to their business.
In order to legally dissolve your LLC in Georgia, a Certificate of Termination must be filed with the GA SOS. The GA SOS website provides a Certificate of Termination form (Form CD 415) that can either be filled out and filed or used as a guide for a business to draft its own Certificate of Termination. This Certificate can be filed via mail along with a ten dollar ($10) filing fee, or it can be filed online for free!
The Certificate of Termination must contain the business name, control number of the business, the requested effective date for dissolution, as well as the affirmations that (1) all business debts, obligations, or liabilities have been paid; or adequate provisions made, therefore; and (2) there are no pending actions against the LLC; or adequate provisions made for the satisfaction of same.
Once the Certificate of Termination has been submitted in an acceptable form, the typical turnaround time for the GA SOS to process the dissolution is seven to ten days.
When the shareholders and the board of directors of your corporation have officially decided that they would like to dissolve the business, there are several steps that must be followed in order to execute a legally effective corporation dissolution.
First, a Notice of Intent to Dissolve must be filed. This Notice must be filed with the GA SOS and the required elements are as follows: the name of the corporation, the date the dissolution was authorized by the corporation, and a statement that the dissolution was approved by the shareholders in total compliance with O.C.G.A §14-2-1402 – the appropriate section of the Georgia Business Corporation Code. The GA SOS provides a recommended form for a Notice of Intent to Dissolve – Form CD 410.
The Notice must also include a statement that you have officially made a request for publication of notice that your corporation intends to dissolve. Form CD 410 provides the following statement that should be used in your Notice to comply with this requirement: “The undersigned does hereby certify that a request for publication of a notice of intent to voluntarily dissolve the corporation along with a publication of fee of $40.00 has been forwarded to the official organ of the county of the registered office as required by O.G.C.A. §14-2-1403.1(b).”
This leads to the second dissolution requirement – Publication of Notice! All dissolving corporations are required to publish a notice of intent to dissolve in a newspaper that is of general circulation in the county where the business’s registered office is located. The Georgia Business Corporation Code provides recommended language to use in the newspaper notice. The request to publish in the newspaper must be mailed within one (1) business day of your filing the Notice of Intent to Dissolve with the GA SOS.
Once your corporation is officially dissolved with the GA SOS, it technically still exists for the purposes of “winding up” the remaining final tasks of the company. These tasks are listed in the Georgia Business Corporation Code and include obligations such as discharging liabilities and collecting the corporation’s assets.
The final recommended step in a corporation dissolution is filing an Articles of Dissolution. This document is not technically required to be filed, but it is highly recommended to do so in order to officially complete the voluntary dissolution of your corporation. The Articles of Dissolution for a corporation is very similar to the LLC Certificate of Termination. The GA SOS provides the form Articles of Dissolution on its website (Form CD 412).
While the business dissolution process may seem straightforward, it entails many moving parts and required statements. Utilizing an Atlanta business attorney will provide you with peace of mind that all your filings are properly filed and contain all of the necessary language. Having the assistance of an attorney can allow you to confidently close your business’s chapter in your life and know that you have legally ended its existence in accordance with Georgia law.
The attorneys at Sparks Law have helped many clients across various industries navigate their way through the process of voluntarily dissolving their businesses! If you need assistance and are looking for efficiency and peace of mind in dissolving your business, please contact our office today for more information.