Are you ready to stop doing business with your Vermont corporation, but you’re not sure how the official dissolution process works?
The state of Vermont requires corporations to file documentation of a dissolution, which can differ depending on a couple of key factors. What are these factors, and what does the dissolution process include? In this guide to dissolving a Vermont corporation, we’ll break down all the relevant details.
If at any point you need help, you can use a service like Incfile or Northwest Registered Agent to handle the process for you.
Rocket Tip: Most company formation services are also able to dissolve your entity for a small fee. They’ll take care of the paperwork so you can move on. Two popular options are LegalZoom and Incfile.
What Does It Mean to Dissolve a Corporation?
In any state, there is a series of steps that needs to be followed in order to properly dissolve a corporation. While this process does vary some from state to state, for the most part it’s necessary to follow this basic plan (unless your corporation has not yet issued shares or started doing business, which we’ll get to shortly):
- Hold a board of directors meeting and formally move to dissolve your corporation. The resolution to dissolve must be agreed upon by a majority of the corporation’s directors. Depending on your corporation’s structure, you may then need to take the vote to your shareholders. Either way, it’s important to take detailed records of this process for your corporate record.
- Fill out and file the Articles of Dissolution with the Vermont Secretary of State.
- Fulfill all tax obligations with the state of Vermont, as well as with the IRS.
- Cancel any relevant licenses and permits, along with closing your business bank account.
- Notify customers, vendors, and creditors of your dissolution.
Most of these steps are fairly self-explanatory, but where many corporation owners run into some confusion is when it comes to the Articles of Dissolution. With that in mind, let’s dive into the details of this step.
How to Dissolve a Vermont Corporation by the Board of Directors
Most corporations must be dissolved by the board of directors, and we discussed the necessity of holding a meeting to reach this resolution in the previous section.
In the state of Vermont, you’ll need to fill out and file a document known as the Articles of Dissolution. Vermont encourages you to file this form online. You can mail in a form if you wish by printing it off near the end of the process. This form requires the following information:
- Name of your corporation
- Date of dissolution authorization
- Description of the voting: who voted, and how many votes were cast before or against
- Statement that all debts have been settled, including the wages due to employees, reimbursements to investments, etc
- Effective date of your dissolution
Once you’ve finished filling out your Articles of Dissolution, you’ll need to pay the $20 filing fee. Online filings will need to pay by credit card, but if filing by mail you can use a check made payable to the Secretary of State. If using mail, send both your form and payment to the following address:
Vermont Secretary of State
Corporations Division
128 State Street
Montpelier, Vermont 05633-1104
Under typical circumstances, you can expect the state of Vermont to process your dissolution filing within 3-5 business days. Mail-order filings take a little longer—usually 7-10 business days.
How to Dissolve a Vermont Corporation by the Incorporators
Sometimes, entrepreneurs need to dissolve their corporation before shares are issued or any business is transacted. In this situation, the incorporator will need to take responsibility for dissolving the corporation.
In Vermont, the form to dissolve your corporation if you have not yet conducted business is exactly the same as above. The only difference is that you will not have to describe the voting of your shareholders. Instead, you’ll describe who made the decision to dissolve.
Vermont highly encourages you to use their Online Business Service Center for this filing. You can also file by mail by printing off the form near the end of the process. If filing online, you should pay by credit card; mail-order filings can pay by check made payable to the Secretary of State. The fee is $20. If filing by mail, you can send your form and payment to the same address:
Vermont Secretary of State
Corporations Division
128 State Street
Montpelier, Vermont 05633-1104
Finally, you can expect your filing to be processed within 3-5 business days. Mail-order filings take a little longer for a total of 7-10 days.
What Else Do I Need to Know About Dissolving a Corporation in Vermont?
When the effective date of your dissolution arrives, your business name becomes available for anyone who wants to use it. This is one of the reasons that you should never dissolve a corporation until you’re absolutely certain that you will no longer conduct business in this state.
There’s also the issue of administrative dissolutions to discuss. This is when the state dissolves your corporation without you requesting that they do so. This can happen if you fail to file your annual report within two and a half months of the due date. If your corporation is found conducting illegal activities or activities against the public interest, you may be judicially dissolved, too.
If you voluntarily dissolved your corporation, you can reinstate your business by filing a Revocation of Dissolution. The fee is $20, and it must be filed within 120 days of your dissolution. If you were dissolved by force, you’ll first need to correct the issue that caused your dissolution. This may entail paying delinquent annual report fees, plus any applicable late fees.
All told, the administrative dissolution and reinstatement process can be a burden for a corporation, and it’s best to avoid this situation altogether.
Conclusion
The process to dissolve a Vermont corporation that has not distributed shares or transacted business is pretty similar to the process to dissolve one that has started business. The latter is a touch more complicated, but both use the same form.
Either way, it’s crucial that you complete each step discussed in this guide accurately, because you certainly don’t want to run into any issues with the dissolution process.
We hope this guide helped you answer any questions you might have had about dissolving a Vermont corporation!