Is it time to close your Pennsylvania corporation, but you’re not sure where to start the process?

Dissolving a corporation is a lengthy but manageable endeavor. And every state’s procedure looks a bit different. In this guide, we’ll cover the state-specific components of dissolving your Pennsylvania corporation. In no time, you’ll be on your way to whatever’s next.

The Basics of Dissolving a Pennsylvania Corporation

In general, every dissolution follows the same basic structure, with 5 basic steps. There are, of course, a lot more “nuts and bolts” to the process (read more about them here), but for now, let’s get a bird’s eye view:

  • Vote to dissolve the corporation: Corporations are not solo endeavors, and ending them isn’t one individual’s call. First, your board will need to convene and vote on a motion to dissolve the corporation. After that, some corporations will need to have their shareholders vote for the dissolution as well (depending on the corporation’s bylaws).
  • File the dissolution paperwork: Once your corporation’s members have decided to dissolve, you’ll reach out to the Pennsylvania Department of State and fill out the appropriate Articles of Dissolution.
  • Fulfill your tax obligations: Your corporation will need to pay any taxes due to the IRS and the Pennsylvania Department of Revenue. This can be a multi-step process as you liquidate assets and pay any creditors.
  • Cancel licenses and close accounts: If your corporation maintains any licenses or permits, this is the time to cancel them so you aren’t charged renewal fees. You should also close down accounts with vendors and your bank (once your financial affairs are settled).
  • Notify your stakeholders: A dissolving corporation must settle any financial debts, liquidate its assets, and distribute the appropriate funds to its shareholders. Stakeholders must be notified so they can lay claim to their share in a timely fashion.

That’s the gist of dissolving a Pennsylvania corporation. But before you can truly start the process, you’ll need to answer one important question.

Who’s Dissolving the Pennsylvania Corporation?

Two key groups can dissolve a corporation: the original incorporators and the initial board of directors or the shareholders. The group initiating the dissolution affects how you file with the Secretary of State. So let’s talk about each.

Dissolving a Pennsylvania corporation by the incorporators or initial board of directors

In some cases, a Pennsylvania corporation might decide to dissolve before they really get things up and running. More specifically, if the corporation hasn’t issued stock or conducted any business yet, then the incorporators or initial directors will be the ones who vote to dissolve the corporation.

Once the dissolution vote passes, the corporation can file the Articles of Voluntary Dissolution [Never Transacted Business] form. Here’s the information required to complete this document:

  • Return contact information for the form
  • Confirmation the the dissolution was approved by the shareholders or incorporators
  • Name of the corporation
  • Address of the registered agent
  • Statute you incorporated under
  • Date of original incorporation
  • Confirmation that no business has been conducted
  • Confirmation that any money from shares have been distributed
  • Whether liabilities have been discharged or plans have been made to pay them
  • Who approved the dissolution: majority of shareholders or majority of incorporators
  • Date of execution of the form
  • Signature of a majority of the incorporators or shareholders

There is a $70 fee for this filing. Pennsylvania normally processes this paperwork within a week.

Dissolving a Pennsylvania corporation by the shareholders

In a corporation that has issued shares, the dissolution process looks a little bit different. In most cases, the board votes for a motion to dissolve the corporation. Then that vote is brought before the shareholders for approval.

Once that approval is obtained, it’s time to file the paperwork steps. Since you’ve started business, you’ll have to start by getting a Tax Clearance Certificate for the Department of Revenue. You can do so by filing the Application for Tax Clearance Certificate form. Getting this certificate is free, but the process can take about 4 weeks.

Once you have a clearance Certificate, you can file your Articles of Dissolution. Here’s the information required to complete this document:

  • Return address for the finished document
  • Name of the corporation
  • Address of the registered agent
  • Statute the business is incorporated under
  • Date of incorporation
  • Name and address of each director
  • Name, address, and title of each officer
  • How the dissolution vote was approved
  • Confirmation that your liabilities have been resolved or plans have been made to dispose of them appropriately
  • What become of the corporation’s assets
  • Confirmation that no suits are open against the corporation
  • Confirmation that notice was sent to the shareholders
  • Name, title, and signature of an authorized officer
  • Attached certificate of clearance

This form costs $70 to submit. Pennsylvania usually processes it within a week.

What About Administrative Dissolutions?

Sometimes, the state of Pennsylvania may force a corporation to dissolve against its will. Usually, this happens because a corporation hasn’t filed its annual report, paid its taxes, maintained its registered agent, renewed appropriate licensure, or some other clerical error. A corporation may also be dissolved for any activities that are ruled fraudulent or otherwise harmful to the public.

In most cases, these corporations can be restored and resume business. The process can be quite a hassle, but it is manageable. First, a corporation must resolve whatever issue caused its dissolution. A corporation with defunct annual reports, for example, would need to submit the reports and pay any missing fees (plus late fees).

After that, you’ll need to apply for reinstatement with the Department of State. This requires you to file your delinquent decennial report and pay any fees. Please note that your business name becomes available immediately, so before you apply for reinstatement, you’ll have to check that your name is still available.

It’s far easier to avoid dissolution entirely; remain compliant with your corporation, and you can skip this step completely.

Frequently Asked Questions

What happens to my Pennsylvania business name?

As soon as your dissolution paperwork is processed, your name becomes available for other businesses to use. That’s why we highly recommend being 100% sure you’re done conducting business before filing any dissolution paperwork.

Can I change my mind and go back into business?

Pennsylvania doesn’t have a statutory provision for reinstating your corporation if you voluntarily dissolved. That’s why it’s imperative to be 100% sure that you’re done conducting business before you file any paperwork. The only reinstatement provisions are provided to corporations dissolved administratively.

What if I want to become an LLC instead of closing my business?

Pennsylvania no longer has a statutory provision for entity conversions. If you want to become an LLC, you’ll first have to dissolve your corporation and then start from scratch as an LLC. For more information on how to start and run an LLC, check out our guide to starting a Pennsylvania LLC.

Do I have to publish a notice that my corporation is dissolving?

Yes; Pennsylvania requires you to publish a written notice in a local newspaper so any stakeholders can come forward and make a claim if they need to. You must publish this newspaper notice at least once a week for at least two weeks. It must be included in all editions of a daily newspaper with national circulation. These are stiffer publication requirements than some states, so be sure to meet all requirements. You can read more about these legal requirements here.

How can I avoid being dissolved because of a registered agent issue?

In Pennsylvania, you can be administratively dissolved if you let your registered agent coverage lapse. Thankfully, you can avoid this problem easily. If you’ve picked a new agent or your old agent has resigned, simply file the Change of Registered Agent form as soon as possible. There’s a small $5 fee.

As long as you avoid a lapse in your agent coverage, your corporation will stay compliant.

How long do Pennsylvania stakeholders have to lay claim to my corporation’s assets?

When you publish notice that your corporation is dissolving, you actually get to set out how long your stakeholders have to come forward and make a claim. That said, you need to provide them at least 60 days after you give notice of your dissolution. You can provide a longer window if you wish. For more information on these requirements, check out the state’s dissolution statutes.

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