Forms for liquidating an s corporation
While “complete liquidation” is not defined by the Internal Revenue Code, IRS regulations suggest that your corporation enters liquidation status when it ceases to be a going concern and, instead, corporate activities are mainly for the purpose of closing down the business, paying corporate debts and distributing remaining assets to the shareholders.
You can draft your corporation’s bylaws to describe specific processes for liquidation and dissolution.
Many states require a "super-majority" of shareholders -- shareholders representing up to two-thirds of outstanding shares -- to approve dissolution, even if corporate bylaws require a simple majority.
A dissolving S corporation must file articles of dissolution, which is a notice of intent to dissolve, or an equivalent document with the state secretary of state.
One other "S corporation liquidation" wrinkle should be mentioned: Any assets that your S Corporation owns at the time of liquidation will in effect be distributed to shareholders.
If your bylaws give your officers authority to approve dissolution and establish a liquidation plan, the consent of a majority of officers is typically required to begin the dissolution and liquidation process.These events must be documented in writing and filed with the secretary of state in the state where you formed the company, as well as any other states where it was approved to do business. The owners of sole proprietorships, partnerships, LLCs and S corporations all have one thing in common: When they dissolve their companies, they have to wrap up business with the IRS as well.In the case of an S corporation, this document will be the "Articles of Dissolution." If you don't legally dissolve your LLC or corporation, you still are liable for taxes and filings, notes the U. The IRS requires you to file your quarterly or annual returns for the year you close your business, final employment tax returns if you have employees and final federal tax deposits.Every business--even a very successful business--eventually ends.Accordingly you will need to someday to shut down, or liquidate, any S corporations you start.