Dissolve Your Washington D.C. Business Today

Whether you want to close your business due to bankruptcy or retirement, each business that closes must properly dissolve and wind up its affairs under an orderly legal procedure. Failure to follow this procedure could result in personal liability to the business’s owners for business debt, government fines or fees, and taxes, or negatively impact personal credit or future business ventures.  

If you’re looking to form a new Washington D.C. business, check our D.C. corporation formation service or limited liability company (LLC) formation service to see how we can make the process quick and easy.

Before dissolving your Washington D.C. business

The grant of limited liability to a business’s owner comes with the basic obligation to respect the business entity as its own legal “person” (e.g., corporation or LLC). The best way to do this is to keep thorough and proper business records. Each significant act of the business should be in writing and saved. Having this paper trail will ease dissolution because important information will be readily accessible. You should consider assembling as many of these documents as you can to prepare for dissolution.

Step 1: Establish a valuation of your Washington D.C. business

To dissolve a Washington D.C. corporation or LLC, you need to know what your business is worth, and that is defined by its assets. Your business’s assets are usually its tangible property such as real estate, inventory or vehicles. Occasionally, it may include intangible property like vendor contracts or patents. Once you identify the business’s property, gather all relevant property documents (e.g., vehicle titles, bills of sale, contracts etc.). We know it can be difficult to value your business. Therefore, don’t hesitate to hire a professional, such as an accountant or appraiser. You might wonder why you need to value your business — it has to do with paying business creditors, which we discuss in Step 6.

We can make assembling these important documents easier with our Worry-Free Compliance service and dashboard feature which keeps your most important business documents safe and organized.

Step 2: Compile a full account of your Washington D.C. business’s debts

Now that you have an accurate picture of the value of your business, consider compiling a list of business creditors and amounts owed. This list needs to be accurate, because in Step 6 you will have the opportunity to close out creditor debts. During dissolution, if the business fails to identify a creditor or properly value a creditor debt, an owner could be personally liable. 

Finally, just because you dissolved your business, doesn’t mean that its debts go away or don’t have to be paid. A business, as its own legal person, usually must pay its lawful debts, and ignoring them could be personally costly to its owners. An exception to this rule is bankruptcy dissolution.

Step 3: Identify Washington D.C.’s official dissolution document

To officially dissolve your business in D.C., you must file a formal dissolution document with the Washington D.C. Corporations Commission of the Department of Consumer and Regulatory Affairs (DCRA). The two most common forms are:

• Corporations — Articles of Dissolution of a Domestic For-profit Corporation – Form DBU-7
• LLCs — Statement of Dissolution for a Domestic Limited Liability Company – Form DLC-8

You can file these documents either online or via regular mail. Both methods are listed on the bottom of the dissolution document.

Step 4: Follow instructions in your Washington D.C. business’s operating document

It’s important for businesses to have a governing document. For corporations these are called bylaws, and for LLCs it’s called an operating agreement. These documents provide specific instructions on how to internally dissolve your business. We can provide an operating agreement template during the formation of your business to help you tailor one to your business’s needs. 

Having this document isn’t only good business practice but also makes running your business significantly easier. Keep in mind that whether your business has an organizing document or not, you still must follow the D.C. statutes governing corporations and LLCs to dissolve your business. This is especially important if you don’t have a governing document.

Step 5: Cancel your Washington D.C. business’s licenses, permits, and registrations

More than likely, if you operated a business in D.C. you had a basic business license (BBL), along with several other licenses and permits. Make sure you cancel your BBL, as well as any other licenses and permits. Some of these licenses or permits might automatically renew, so make sure you cancel them to avoid continuing to pay the fees.

Step 6: Wrap up your Washington D.C. business’s legal and financial obligations

There are four key areas that need to be addressed in this step:

• Notify your business creditors that you are dissolving and give them the legally required time to respond (usually 120 days). D.C. statutes will give you the proper procedure. If you dissolve your business before the creditor notice period expires, the business’s owners could be liable for any amounts owed to creditors. If a creditor contacts you, then you must decide whether to pay, and we urge you to consult a professional in this situation.
• Make sure that all your obligations to the federal government (including the Internal Revenue Service — IRS) and D.C. are fulfilled regarding any employees. There may be various reporting and tax filing obligations required.
• File final tax returns with the D.C. Office of Tax and Revenue and the IRS, and cancel the business’s tax I.D. numbers. Failure to file final returns and terminate any tax identification numbers could result in owner personal liability. 
• Distribute any remaining business assets to the owners as instructed in the business’s governing document.  

Bear in mind that all these steps, together with filing your official Certificate of Dissolution or Articles of Dissolution in Washington D.C., have to be completed in the proper order, with the official dissolution filing usually occurring last.

Step 7: File Articles of Dissolution or a Statement of Dissolution for your Washington D.C. business

Note that you need to file the right document depending on whether your business was a corporation or an LLC. You can file your dissolution documents either online or via mail.

We can help you organize your Washington D.C. business from formation and beyond

We can help you start right by helping form your business, getting you the right governing documents, and keeping you organized and compliant. With our various formation and compliance services, we can assist you in running a smooth business and staying ahead of the competition.