When one wishes to start a corporation, the state where the corporation will be based has something to say about the process. The same is true when it is time to close a corporation. Doing this correctly is essential for winding up the affairs of the business entity.
While dissolving a corporation in the state of Nevada is not a long or particularly involved process, it is definitely important to get an overview of the process before starting. That will save time and energy in the long run.
Dissolving a Corporation
Anyone seeking to bring their corporation to an end needs to understand what it means to dissolve a corporation. There are a series of steps to be followed, and each state has it's own particular rules. Generally, these are the steps that must be followed:
- Bring a resolution to dissolve the corporation at a meeting of the corporation's board of directors. The corporation’s directors must agree.
- The shareholders must also vote on the dissolution if the corporation is for profit.
- File the Certificate of Dissolution with the secretary of state in the state in which the corporation is based.
- File state and federal corporate tax returns and fulfill all tax obligations.
- Cancel any corporate licenses and permits as well as the corporate bank account.
- Give notice of the dissolution to creditors, customers and vendors.
Nevada Steps for Corporate Dissolution
In Nevada, a corporation can be dissolved by its board of directors if no stock had ever been issued. However, if stock was issued, Nevada statutes allow for voluntary dissolution only through a stockholder vote at a stockholder meeting. To get the vote before the stockholders, the board of directors must submit a dissolution proposal to them.
Every stockholder must get notice of the meeting where the stockholders will vote on dissolution, even those not personally entitled to vote. Nevada's statutes require that a majority of stockholders vote to approve dissolution, although more may be required under the corporation's articles of incorporation or bylaws.
Both the board's proposal and the stockholders' votes must be officially recorded in the meeting minutes and filed in the corporate records book.
Stockholders' Meeting Not Always Necessary
No meeting with stockholders need to be called if written consent of the dissolution is obtained from the number of shares required for dissolution approval. Check to make sure this is not prohibited in the articles of incorporation or bylaws of the corporation. If this method is allowed and used, it is not necessary to hold a stockholder meeting.
Filing the Certificate of Dissolution
In Nevada, the certificate of dissolution must be filed with the Nevada Secretary of State's office. The easiest way to accomplish this is online. Visit the website of the secretary of state and access the business center.
This center contains links to use to close down a corporation. Select the certificate appropriate for the type of corporation being dissolved and complete the form. The person filing the form is required to complete the certificate of dissolution with this information:
- Name of the corporation.
- Nevada state ID number of the corporation.
- Certification that the dissolution was authorized by the appropriate persons, the directors alone or both the directors and stockholders.
- Names and addresses of the president, secretary, treasurer and all directors of the corporation.
- Date and time the dissolution is effective.
- Signature of the corporate officer.
The form you select – regular or expedited – will indicate the appropriate filing fee for that form. The normal filing fee is $100, and the expedited fee is $225. Checks for these fees must be made payable to the Nevada Secretary of State. Note that regular processing takes about a week, while expedited processing is accomplished in 24 hours or less.
Mailing the Filing Forms for Nevada Dissolution
Mail the normal filing form to: Secretary of State, Amendments Division, 202 North Carson St., Carson City, Nevada 89701-4201.
Mail expedited filings to: Secretary of State – Las Vegas, North Las Vegas City Hall, 2250 North Las Vegas Blvd., 4th Fl., North Las Vegas, Nevada 89030.
Once this is accomplished, the corporation will be dissolved if it is an entity that has not yet begun business operations. However, if the corporation has been operating as a business, there are more tasks to accomplish.
Wind Up the Business Affairs
If the corporation has been in business, its business matters must be wound up before the corporation shuts down. Someone must be selected to be in charge of winding up the financial affairs of the corporation.
That person must locate all creditors and pay every outstanding obligation and debt, including any shareholder loans to fund the corporation. It also includes determining and paying any outstanding state sales and payroll taxes.
This manager should also hold back some funds to cover any contingent liabilities of which the corporation is aware. This includes pending lawsuits and any creditors who may come forward during the two-year window they have in Nevada to make a claim. A trustee should be appointed to manage the account holding these reserves.
Liquidation of Assets to Settle Debts and Pay Shareholders
The remaining assets of the corporation must be liquidated and the funds used to pay these debts and obligations. Any extra funds are distributed to the shareholders in proportion to their ownership interests, but not until the two-year period for creditors to make claims is finished. Appoint a trustee to manage the account that holds the reserves for contingent liabilities.
Dissolving a Nonprofit Corporation
A nonprofit corporation does not have any shareholders. For this reason, the assets of a Nevada nonprofit corporation that is being dissolved must be transferred to another nonprofit corporation or to another tax-exempt entity. The board must approve the nonprofit to receive the assets. Once the assets are transferred, the Nevada nonprofit corporation is dissolved.
Final Tax Returns
File a final set of income tax returns for a dissolved for-profit corporation. This includes federal tax returns and any required state tax returns. All outstanding tax debts must be paid. On the front of the tax form there is a box indicating "final return." This should be checked.
Filing a tax return with this box checked will finally close the corporation's tax account with the federal and state governments. For nonprofit corporations, file an information return.
Teo Spengler earned a J.D. from U.C. Berkeley's Boalt Hall. As an Assistant Attorney General in Juneau, she practiced before the Alaska Supreme Court and the U.S. Supreme Court before opening a plaintiff's personal injury practice in San Francisco. She holds both an M.A. and an M.F.A in creative writing and enjoys writing legal blogs and articles. Her work has appeared in numerous online publications including USA Today, Legal Zoom, eHow Business, Livestrong, SF Gate, Go Banking Rates, Arizona Central, Houston Chronicle, Navy Federal Credit Union, Pearson, Quicken.com, TurboTax.com, and numerous attorney websites. Spengler splits her time between the French Basque Country and Northern California.