Steps to Dissolve Your Minnesota Business
- Establish a valuation of your Minnesota business
- Compile a full account of your Minnesota business’s debts
- Identify Minnesota’s official dissolution document
- Follow instructions in your Minnesota business’s operating document
- Cancel your Minnesota business’s permits, licenses, and registrations
- Wrap up your Minnesota business’s legal and financial obligations
- File Articles of Dissolution or a Statement of Dissolution for your Minnesota business
Whether you have decided to retire, move on to a new venture, or just need a break, it’s important to know how to properly close down a Minnesotra business. If you’ve decided it’s time to take this leap, there are steps you’ll need to take to make sure it’s done correctly. Let’s take a look at how to dissolve a business in Minnesota, and how we can help.
The importance of formal dissolution of your Minnesota business
There are many reasons that a Minnesota voluntary dissolution is a good option. Market circumstances may have caused the business to become stagnant or operate at a loss. Dissolution can help avoid bankruptcy. It’s important to remember that though your business is its own entity, it’s still run by people, and not all people want to do the same things. Disagreements or better opportunities may cause dissolution to be a good option.
Failing to officially dissolve your Minnesota business with the Secretary of State can leave you perpetually responsible for tax payment and reports that the state expects from you. You may also incur fines and financial penalties for late filings. Just because you no longer consider the business active, doesn’t mean that regulatory agencies consider it inactive. The only way to ensure that the government knows your company is inactive is by filing the proper dissolution documents. If you have a failing business still legally active, it could make starting a new business and gaining support more difficult.
If you’re looking to form a new business following the dissolution of your existing business, consider our Minnesota LLC Formation Service or Corporation Formation Service. Keep reading to learn the step-by-step process of dissolving your Minnesota business.
Before dissolving your Minnesota business
We are going to get into what actions you need to take to execute Minnesota business dissolution — but we feel like we should mention this tip first. If you’re still operating your business and just curious about how dissolution works, we want you to know that being prepared is the best way to have a smooth and successful business dissolution. This means that while your business is still operating, it’s best to keep your business compliant with the state and up to date with all internal records and documentation. In other words, keep your paperwork organized while running your business! Having everything you need at your fingertips can save you from countless grey hairs.
Step 1: Establish a valuation of your Minnesota business
Knowing what assets you’re working with is a good place to start. Know the value of your business. Gather information about real estate, equipment, product inventory, and any other assets that belong to the company. Obtain all third-party contract information and tax documents. A professional can help you value your business so you aren’t guessing. One of the best ways to stay organized with this information is to use our Worry-Free Compliance Service.
Step 2: Compile a full account of your Minnesota business’s debts
Dissolving your Minnesota business doesn’t dissolve your business debt. Just as knowing your assets is crucial to valuation, so is knowing your debts. With any luck, your assets exceed your debts, but even if they don’t, that’s still information you need to know. If your debts aren’t paid, debtors may be able to file a lawsuit against members or shareholders and hold them personally liable. This concept is called piercing the corporate veil, and it allows courts to shift liability from the business entity to those who run it.
Step 3: Identify Minnesota’s official dissolution document
To dissolve your Minnesota business, you must officially file for dissolution with the Minnesota Secretary of State. The exact document you use will depend on the type of business entity you are dissolving.
- Corporation: Intent to Dissolve and Articles of Dissolution
- Limited Liability Company (LLC): Statement of Dissolution and Statement of Termination
The Intent to Dissolve and Statement of Dissolution put the state on notice that the company is in the process of dissolution. Once all notifications have been made to creditors, members, shareholders, etc., and the winding up process has been completed, the second document can be filed. Winding up is the process of ceasing business and tying up loose ends such as distributing or liquidating assets, paying creditors, terminating employees, and other actions that essentially cancel the company.
Submit all of these documents to the Minnesota Secretary of State. File online, in-person, or via postal mail, and pay applicable filing fees.
Step 4: Follow instructions in your Minnesota business’s operating document
Corporate bylaws, LLC operating agreements, and partnership agreements don’t have to be filed with the state. That doesn’t mean they aren’t crucial to the organization of business operations. When thoroughly drafted, these documents will include all necessary information regarding the process of dissolution. If there are no exit strategy provisions in the operating documents, you will have to follow the state guidelines.
Having these provisions in place simplifies the steps for dissolution and sets expectations with members, partners, or shareholders. If you need to draft your LLC operating agreement, consider using our Operating Agreement Template to make sure you cover everything that’s important.
Step 5: Cancel your Minnesota business’s permits, licenses, and registrations
Minnesota doesn’t have a statewide general business license, but it’s likely that you have had to acquire some sort of Business License or Permit to do what you do. Business permits and licenses may renew automatically. Just like that subscription you‘ve been meaning to cancel, it’s easy to forget. Put effort into identifying permits and licenses that you need to cancel when you dissolve your Minnesota business.
Step 6: Wrap up your Minnesota business’s legal and financial obligations
Follow all federal and state laws when wrapping up your business. Follow regulations for employee payments, including benefits. Try to recover payments from any outstanding accounts. Liquidate any remaining assets so you don’t have anything hanging over your head. Give proper notice to clients, vendors, and partners. File your final tax returns and cancel your employer identification number (EIN) with the IRS.
Step 7: File Articles of Dissolution or a Statement of Dissolution for your Minnesota business
After you’ve made sure to complete all the aforementioned steps, it’s time to file your official dissolution documents with the Minnesota Secretary of State. Two documents need to be filed with the state to fully dissolve your Minnesota LLC or corporation. File the first document when you start the Minnesota business dissolution process (Intent to Dissolve or Statement of Dissolution). File the final document once winding up the business has finished (Articles of Dissolution or Statement of Dissolution). Upon the completion of document processing, your business name is up for grabs by another company.
We’re here to help in all stages of your Minnesota business
From formation to dissolution, we are here to make the complicated process of running a business a whole lot easier. We want to see you succeed by helping you stay compliant and on task with everything you need to do. Let us help you take care of the paperwork, so you can get back to doing what you do best.
Disclaimer: The content on this page is for information purposes only, and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.
- How do I dissolve a business in Minnesota?
There are several tasks to complete and documents to file before your business is officially dissolved and you’re relieved of all responsibilities for the company. Officially dissolve your Minnesota business by filing dissolution documents with the Secretary of State when you start the process and when you finish the process.
- How much does it cost to dissolve an LLC in Minnesota?
Administrative filing fees are subject to change. Check with the Minnesota Secretary of State for the most updated fee schedule.
- How long does it take to dissolve an LLC in Minnesota?
It usually takes 7-10 business days to process your dissolution document filing with the Secretary of State. Expedited service is available.
- How do I dissolve a nonprofit organization in Minnesota?
Obtain approval of the dissolution from the board, members, or directors, depending on the structure of the business. File a Notice of Intent to Dissolve with the Secretary of State and one with the Office of the Attorney General.