Nashua Business Owner has questions about shutting down (i.e. “dissolving”) the business

close down the businessAfter many years in business, an S-Corporation with two employees and two shareholders/owners has decided to close down the business. It seems like a simple process. Closing a business is indeed a process; but in New Hampshire the process is not necessarily simple.

First, to dissolve a business, it must be authorized by a vote of the shareholders

The notice of the shareholder meeting must state that one of the purposes of the meetings is to consider dissolving the corporation. Unless otherwise required, a majority vote of the shares entitled to be cast is sufficient.

Second, documents called Articles of Dissolution must be filed with the NH Secretary of State after the dissolution is authorized.

A copy of the Articles of Dissolution must be mailed to the NH Department of Revenue Administration (DRA).

Third, Notice to the DRA must be provided

A corporation cannot transfer assets to shareholders until all taxes have been paid and a Certificate of Dissolution obtained from the DRA. A Certificate of Dissolution is obtained by filing a Form AU-22.

Fourth, the corporation may want to send notice to known creditors to file claims before a deadline of not less than 120 days

The corporation may also publish notice in a newspaper of general circulation in the county of the corporation’s principal office or registered office, which then starts a 5 year time frame for unknown claimants to file a claim.

Fifth, IRS Form 966 (required for a corporation)

Must be filed with the IRS within 30 days after the resolution or plan is adopted to dissolve the corporation. Must attach a copy of the resolution or the plan of dissolution.

Finally, a plan of dissolution should set forth the terms of the dissolution

This is to determine what will happen to the assets and liabilities of the corporation, who has authority to take what actions, and when distributions can be made to shareholders or members.

At Welts, White & Fontaine, P.C. our lawyers have experience representing owners of closely held businesses in a wide array of industries including professional practices, technology companies, manufacturers, car dealerships, franchisees, restaurants and a wide array of small businesses. We can help guide you through a successful navigation of New Hampshire’s corporate dissolution laws. Please contact Attorney John Polgrean if you have questions or concerns about your business planning endeavors or the need to dissolve a business. (603) 883-0797. jpolgrean@lawyersnh.com or fill out our Contact Us form.

Author: John Polgrean

This blog is intended for informational use only. The information contained herein should not be construed as offering legal advice or a legal opinion.