How to Dissolve a Corporation: Board, Shareholders, IRS and State
Board approval, shareholder vote, IRS notice, state filing and final returns for C and S corporations.
This page is one part of our step-by-step guide to closing a business.
To dissolve a corporation, the board adopts a resolution to dissolve and the shareholders approve it. Then the company winds up its affairs, files a certificate or articles of dissolution with the state, files final federal and state tax returns, and distributes remaining assets to shareholders after creditors are paid.
How to dissolve a corporation, step by step
01Board resolution
The board of directors adopts a resolution recommending dissolution, usually at a meeting or by unanimous written consent. Record it in the minutes.
02Shareholder approval
Shareholders vote to approve, under your articles, bylaws and state law. Check shareholder agreements and any preferred stock terms for separate voting rights.
03Notify the IRS
Corporations generally file IRS Form 966 within 30 days after adopting the resolution to dissolve. Ask your CPA whether it applies to your company, especially if you're an S corporation.
04Wind up
Collect receivables, sell or license assets, end leases and contracts, and notify creditors in writing. Use your state's creditor notice process if it has one.
05File the dissolution
File a certificate or articles of dissolution with the Secretary of State. Some states require a tax clearance first. For Delaware corporations, file the certificate of dissolution and pay any franchise taxes and annual report fees owed through the year you dissolve.
06Final returns and distributions
File a final Form 1120 or 1120-S marked final, final payroll returns and final state returns. S corporations issue final K-1s. Distribute remaining assets to shareholders according to their rights.
Before you file: your company data
Dissolving the entity is usually the point where owners cancel Slack, Google Workspace, the CRM and everything else. Export first. Operating records like chat history, email and CRM data are now licensed to AI companies, with published deals from tens of thousands to millions of dollars, and a deleted workspace can't be recovered.
Check what your data is worth · What to do with every asset
| Item | C corporation | S corporation |
|---|---|---|
| Final federal return | Form 1120, marked final | Form 1120-S, marked final |
| Shareholder reporting | Liquidating distributions reported to shareholders | Final K-1s to shareholders |
| Form 966 | Generally required within 30 days | Confirm with your CPA |
Next in this series: how to dissolve an llc and how to sell a failing business.
Common questions
How long does it take to dissolve a corporation?
Plan on two to six months, depending on debts, assets to sell and whether your state requires tax clearance.
What's the difference between dissolution and winding up?
Dissolution is the formal decision and state filing. Winding up is the work of collecting, selling, paying and distributing that comes with it.
Do shareholders get anything?
Only after creditors, employees and taxes are paid. Preferred shareholders may be paid before common, depending on your charter.
Can a corporation be reinstated after dissolution?
Many states allow reinstatement within a set period, usually with fees and any back taxes paid.