Nevada Dissolution of Corporation
The Nevada dissolution of corporation process is an official step to dissolve a corporation according to the provisions set forth in the state's statute.3 min read
The Nevada dissolution of corporation process is an official step to dissolve a corporation according to the provisions set forth in the state's statute regarding the closure of a corporation.
Dissolving a Nevada Corporation
A corporation is an independent entity with a perpetual life. Even if the shareholders do not use the corporation any longer to conduct business, it will still exist as a legal entity and accrue tax obligations. To dissolve a Nevada corporation, certain steps must be followed:
- When a for-profit corporation is being dissolved before it has started operations, a majority vote of the incorporators or directors is required by law. If the for-profit corporation has begun operating as a business, a majority vote by the directors to dissolve the corporation is required by law along with a resolution to present to the shareholders. The resolution will indicate the board of director's vote to dissolve along with the signature of the president of the board. If the corporation is a nonprofit entity, the law also requires a majority vote by the board of directors.
- Call a meeting of the shareholders of a for-profit corporation that has been conducting business and present the resolution crafted by the board regarding the dissolution of the corporation for a vote. The law requires that there must a majority of the shareholders consenting to the dissolution. Once the vote is taken, the shareholder vote should be recorded in the meeting minutes. The minutes should then be filed in the corporate records book.
- File a Certificate of Dissolution with the Nevada Secretary of State's office. At the Secretary of State website, you can download the appropriate certificate to fill out. Several things are needed on the form: certification that the dissolution is authorized; an effective date for the dissolution; the names and addresses of the responsible parties; signatures. The filing fee must accompany the form. At this point, a corporation that has not yet begun conducting business and is filing a certificate is a dissolved Nevada corporation.
- Appoint a manager to clear up and conclude any outstanding financial affairs of the corporation, which includes paying any debts, obligations, loans to the corporation by shareholders, and outstanding payroll and state sales tax. Money should be put aside to cover any contingent liabilities, such as pending lawsuits, that the corporation is already aware of or suspects will come to fruition once the entity shuts down.
- The assets of the for-profit corporation will be liquidated and any excess capital that is not allocated to pay obligations dispersed to the shareholders in proportion to their ownership interests. Appoint a trustee whose job will be the management of the account holding the reserve funds for contingent liabilities. In Nevada, a creditor has two years to file a claim. After two years has elapsed, the remaining assets in the reserve account can be distributed to the shareholders. At this point, a for-profit corporation that has been conducting business in Nevada is deemed dissolved.
- Arrangements must be made for another nonprofit corporation to accept the assets of the Nevada nonprofit corporation or a corporation sole that is being dissolved. Since a nonprofit corporation has no shareholders, legally, the nonprofit's assets must be transferred to another tax-exempt (nonprofit) corporation. The board must approve the nonprofit accepting the assets as it cannot in any way be conflicted with anyone who is involved with the nonprofit that is being dissolved. When arrangements have been made and approved by the board, at this point, a Nevada nonprofit corporation or corporation sole is considered dissolved.
- Final federal and state income tax returns must be filed for for-profit corporations or an information return is filed for nonprofit corporations. Pay any outstanding taxes. When filing, check the box that notes "final return." When the return is filed along with the box checked, it closes the corporation's tax account with state and federal governments.
There is also a customer order form to fill out. This provides information to the Secretary of State such as:
- The name and address of the person who is to receive copies of the dissolution documents.
- The method of delivery of the documents, which can be by mail, FedEx fax, or email.
- The method of payment for the copies of the documents.
- The agency charges $30 for a certified copy. Two-hour service runs $500 and one-hour service is $1,000.
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