When filing articles of dissolution, Alabama law states they have to be filed with the office of the judge of the probate in the county where the certificate of formation occurred. A certified copy of the articles of dissolution will be sent from the probate judge's office to the Alabama secretary of state. This takes approximately 10 days after the dissolution is filed. If the articles of dissolution are not filed, the company will be legally required to pay any taxes, fees, and penalties.

Dissolving a Corporation

The articles of dissolution are created to start the dissolution process. The articles will provide:

  • The name of the company.
  • The filing date of the certificate of formation.
  • Why the company is dissolving.
  • The effective date of dissolution.

Once the articles are drafted, the next steps to dissolve a corporation include:

  • Holding a board of directors meeting to record a resolution to dissolve.
  • Holding a shareholders meeting to approve the plan to dissolve. A majority of the shareholders must agree.
  • Filing any annual reports with the Alabama secretary of state.
  • Filing any required business privilege tax returns.
  • Resolving any existing business debts.
  • Paying taxes and administrative fees.

Additionally, you must close your business tax accounts with the state of Alabama. To do this, any outstanding taxes or fines must be paid. If the corporation had employees, the taxes you may owe will include unemployment insurance tax and employee withholding tax. If taxable goods or services have been sold in Alabama, any sales and use taxes must be paid. A final return must be filed to close the accounts. If needed, hire a Certified Professional Accountant (CPA) to help navigate through this process.

The corporation must notify all creditors of the plan to dissolve. The creditors should be given a mailing address to submit any claims and provide payment deadlines.

The articles of dissolution must be filed by mail with the state of Alabama. This shows that the corporation is being voluntary dissolved. Once the articles are filed and processed, the corporation no longer exists legally. Once this process is complete, the corporation may not conduct any business unless it is necessary to liquidate assets.

After Dissolution is Complete

Once the articles of dissolution have been filed and the corporation is dissolved, there are additional tasks that should be completed:

  • Distribute all remaining assets to the shareholders. The assets are divided based on ownership percentage. All assets are taxable and must be reported to the Internal Revenue Service.
  • Close all of the corporation's bank accounts. If the accounts are not closed, there may be unexpected legal action related to liability and obligations.
  • Cancel any business licenses and permits the corporation has in Alabama.
  • File IRS Form 966 which alerts the federal government that the corporation has been dissolved.
  • Cancel the IRS account that is attached to the Federal Employer Identification Number (EIN).

When the IRS receives and processes the last tax return, the EIN will become inactive. Although inactive, it is not closed, and that is why the account should be closed. This will limit issues with the IRS in the future. To close the EIN account, all required tax returns, fees, and penalties must be paid.

While Alabama does not require a notice of dissolution for an Alabama corporation, it is recommended to notify anyone who has a claim against the corporation. This is beneficial because if any claims are made in the future, you will be able to show that public notification of dissolution took place.

Dissolution Timeframe

The length of time it takes to dissolve a corporation in Alabama will be different and based on how long it takes to complete each step. This can include:

  • Holding all necessary meetings.
    • Paying all taxes, fees, and penalties.
    • Closing all accounts.
    • Distributing assets to shareholders.

Alabama corporate dissolution processing times will depend on the secretary of state's workload. A good estimate is approximately 3 to 4 weeks, but that time frame cannot be guaranteed. Additionally, the fee for the complete cost of dissolving a corporation will vary.

The name of the dissolved corporation is withheld for 120 days from dissolution approval by the Alabama secretary of state. After 120 days, the name can be taken by any corporation or LLC in Alabama that files with the name. Protections on the name cease after 120 days and cannot be held.

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