Dissolve Your Virginia Business

We see many reasons why an entrepreneur may want to close their business. Maybe the business isn’t profitable, or the partnership isn’t working out, and you’d like to close to avoid bankruptcy. Maybe you’re ready to retire or want to move on to a new business venture. Whatever your reason, it’s important to know how to dissolve a business in Virginia. If you don’t correctly dissolve the business, the state will expect taxes, biennial reports, and license renewals. As an owner, member, director, or officer, the state may hold you individually responsible for fines or penalties. Ignoring the dissolution process could negatively affect your individual credit or future business ventures.

When you’re ready to dissolve your Virginia business, you don’t have to go through it alone. Simply follow these steps for business dissolution and rest easy knowing you’ve closed your business the right way.

If you haven’t started your business yet, we can help you form a Virginia LLC or start a Virginia corporation. When you use our business services, we’ll be here for you from start to finish.

Before dissolving your Virginia business

We know that when you started your business, you weren’t thinking about what would happen when you needed to dissolve ir. However, it’s beneficial to start planning for dissolution early. You’ll want to have all the information about the business in one place, like documentation on taxes and accounts, so you can quickly access them. If you’re stressed about closing, it won’t be fun to try to gather everything at the last minute. Establishing a secure and thorough record of all corporate or LLC dealings will save you time and trouble later. 

Step 1: Establish a valuation of your Virginia business

When you want to dissolve a Virginia LLC or corporation, the first step is to establish a business valuation. Start by gathering all the documents related to business operations, especially third-party contracts and tax information. Then, you’ll assign a value to all the company’s assets, including real estate, inventory, and goodwill. The value of the business’s assets will determine how much it can pay to creditors, shareholders, and yourself. If you’ve never valued a business before, don’t be afraid to hire a professional. 

If you use our Worry-Free Compliance Service, we’ll keep your documents organized during the life of your business to make gathering all this information easier.

Step 2: Compile a full account of your Virginia business’s debts 

The next step is to compile a complete account of the business’s debts. Whether your debts are few or many, you’ll need to know how much and who you owe. Just because you’re closing the business doesn’t mean the debts go away. You could face legal repercussions as a member or owner, even if you run a corporation or LLC. Additionally, shareholders can reach the personal assets of corporate officers or directors through a legal process called “piercing the veil.” Therefore, it’s essential to understand the business’s debts and how to pay them.

Step 3: Identify Virginia’s official dissolution document

There’s a two-step process to dissolve a Virginia corporation. First, you’ll file Articles of Dissolution with the Virginia Corporation Commission. The Articles of Dissolution in Virginia legally alert corporate creditors that the company plans to dissolve. Then, you’ll file Articles of Termination of Corporate Existence to certify that the corporation has wound up the business and distributed all its assets. 

Virginia doesn’t require an LLC to file anything when it plans to dissolve. Instead, you’ll file Articles of Cancellation once the business has finished winding up. You can plan to file these documents online through the Clerk’s Information System, by mail, or in-person in Richmond.  

Step 4: Follow instructions in your Virginia business’s operating document

You can follow the default legal processes for a Virginia voluntary dissolution — found in the Virginia Limited Liability Company Act or the Virginia Stock Corporation Act — unless your corporate bylaws or operating agreement states otherwise. Your operating document might vary the number of member or shareholder votes required to approve the dissolution. You could have a different process for how assets are distributed. 

If you’re still in the formation stage of your business, we offer LLCs an Operating Agreement Template to make dissolution easier. Remember, no matter what the operating agreement or bylaws say, you still need to file the proper dissolution paperwork to officially dissolve your business with the state.

Step 5: Cancel your Virginia business’s permits, licenses, and registrations

When you’re winding up the business, you’ll need to cancel your business’s permits, licenses, and registrations. Some of these licenses might automatically renew, so it’s important to do your research and cancel any that your business holds. You likely registered for a business license from the city or county where your business operates. In addition, you might have licenses or permits from the state or federal government, including industry-specific licenses. If you used a Business Licenses Report from our partners at Avalara, now is a good time to refer back to that verified list.

Step 6: Wrap up your Virginia business’s legal and financial obligations 

One final step to wrap up the business’s legal and financial obligations is to file final tax returns with state and federal governments. The state won’t accept your Articles of Dissolution or Articles of Cancellation unless you’ve paid all taxes and fees. Also, you’ll want to cancel any employment and tax accounts and cancel your EIN with the IRS. Finally, if your business has employees, make sure you abide by federal and state laws regarding final paychecks and paying out other earned benefits. 

Step 7: File Articles of Termination of Corporate Existence or Articles of Cancellation for your Virginia business

When your Virginia corporation has finished winding up its affairs, you need to file the Articles of Termination of Corporate Existence.  By filing this document, you certify that the corporation has distributed all its assets, paid all its taxes, and obtained shareholder approval for the dissolution. A Virginia LLC needs to file Articles of Cancellation that include a statement that the LLC has wound up its affairs. You can include other information if you need to, such as the reason for filing the Articles of Cancellation. 

Once the Virginia Corporation Commission accepts your dissolution documents for filing, your company is officially dissolved. If you’ve followed these steps, you can rest easy knowing that the business’s affairs are wound up and closed. You’re now free to move forward with your next venture.

We are here to help you run your Virginia business

Running your own business is an exciting and scary time. But no matter where you are in the lifecycle of your business, we are here to help. From our quick and easy formation services to our many state compliance tools and filing assistance, we can provide you with the support you need to keep your business running smoothly.