To close a business in Alabama, you file articles of dissolution with the Secretary of State — called a certificate of dissolution for corporations and articles of dissolution for LLCs — pay a $100 filing fee, and complete a short list of steps around it: internal approval by owners or directors, settling state tax accounts, notifying creditors, and wrapping up federal tax obligations. The state filing itself is straightforward. The work around it is where dissolutions usually stall.
What the Dissolution Form Requires
Alabama’s Secretary of State publishes standardized forms for each entity type. A business corporation files under Alabama Code § 10A-2A-14.03, and an LLC files under § 10A-5A-7.02(b).1Alabama Legislature. Alabama Code 10A-2A-14.03 – Certificate of Dissolution2Alabama Secretary of State. Domestic LLC Dissolution The core information is the same either way.
Your entity’s legal name has to match the Secretary of State’s records exactly. A missing comma, or an abbreviation where the full word was registered, is enough to trigger a rejection. You’ll also need your Alabama Entity ID Number, a nine-digit number in the format 000-000-000 assigned when you originally registered.3Alabama Secretary of State. Business Entity Records If you don’t have it, look it up through the Business Entity and Name Search on the Secretary of State’s website.
The form also asks for the date dissolution was authorized, meaning the date directors, shareholders, or members formally voted to close the business.1Alabama Legislature. Alabama Code 10A-2A-14.03 – Certificate of Dissolution Include contact information for someone the state can reach with follow-up questions. Errors in the name, ID number, or authorization date are the most common reasons filings get kicked back.
Get Internal Approval First
Alabama law requires documented internal approval before you file. The exact process depends on your entity type, and skipping it can invalidate the whole filing.
Corporations
For a business corporation, the board of directors proposes dissolution and recommends it to the shareholders, who then vote. Alabama Code § 10A-2A-14.02 sets out this two-step sequence.4Alabama Legislature. Alabama Code 10A-2A-14.02 – Dissolution by Board of Directors and Shareholders The board may decline to recommend dissolution if a conflict of interest exists, but it has to explain that decision to the shareholders. Keep written records of both the board resolution and the shareholder vote. You won’t submit them with the filing, but you’ll need them if anyone later challenges whether the dissolution was properly authorized.
LLCs
An LLC follows whatever dissolution procedures its operating agreement specifies. If the operating agreement doesn’t address dissolution, Alabama’s default rules under Chapter 5A of Title 10A apply, which generally requires consent from a majority of members. Check the operating agreement first, because it controls.
Close Out State Tax Accounts
The Alabama Department of Revenue expects you to close all active tax accounts and pay any outstanding balances before winding down. That includes sales tax, withholding tax, and the business privilege tax.5Alabama Department of Revenue. How to Close a Business
The business privilege tax is the one that catches people. The Department of Revenue has stated that this tax is due every year the entity is registered, whether or not the business is actually operating.6Alabama Department of Revenue. What Taxpayers Must File an Alabama Business Privilege Tax Return Stop operating without dissolving, and the obligation keeps accumulating. For taxable years beginning on or after January 1, 2024, entities that would owe only the minimum privilege tax are exempt, which lowers the stakes for small inactive businesses but doesn’t remove the need to file dissolution paperwork.
Alabama doesn’t require a formal tax clearance certificate for domestic dissolutions the way it does for foreign entity withdrawals, but unresolved tax debts still cause problems. The Department of Revenue can pursue collection against owners personally in some situations, and open accounts keep generating penalties and interest.7Alabama Department of Revenue. How Do I Withdraw or Dissolve My Business
File with the Secretary of State
Once internal approval and taxes are handled, submit the completed form to the Secretary of State’s Business Services Division. Alabama accepts filings two ways: online through the Alabama Interactive portal, or by mail.8Alabama Interactive. Secretary of State Online Services By mail, send two signed copies and a self-addressed stamped envelope to the Secretary of State at P.O. Box 5616, Montgomery, Alabama 36103.2Alabama Secretary of State. Domestic LLC Dissolution
The filing fee is $100 for all domestic entity types: for-profit corporations, nonprofits, and LLCs. The fee is set by Alabama Code § 10A-1-4.31.9Alabama Legislature. Alabama Code 10A-1-4.31 – Filing Fees All Entities10Alabama Secretary of State. Alabama Secretary of State Fee Schedule
Processing runs from a few business days to several weeks depending on volume. When the filing is approved, the office issues a stamped copy as proof, and the entity’s status changes to “dissolved” on the state’s public database.
Notify Creditors to Cut Off Claims
Filing dissolution paperwork does not automatically end claims against the business. Alabama law lets you take steps that bar future claims, and following those steps is the difference between a clean close and a lawsuit years later.
Known Creditors
Any time after dissolution takes effect, you can send written notice to each creditor you know about. The notice must describe what the creditor needs to include in a claim, give a mailing address for submitting it, and set a deadline no less than 120 days from the date you sent the notice. Miss the deadline and the claim is barred. If you reject a submitted claim and the creditor doesn’t sue within 90 days of the rejection, that claim is also barred.
Unknown Creditors
For creditors you don’t know about, or for contingent claims, you can publish notice in a newspaper of general circulation in the county where your principal office sits. The notice must explain how to submit a claim, provide a mailing address, and state that claims will be barred unless the creditor sues within two years of the publication date.11Alabama Legislature. Alabama Code 10A-1-9.22 – Unknown Claims Against Dissolved Domestic Entity Publication is optional but worth doing. It is the only way to create a hard cutoff for claims from people you didn’t know to contact directly.
Handle the Federal Side
The Alabama filing takes care of the state. The IRS is separate.
Any corporation that adopts a resolution or plan to dissolve must file IRS Form 966 within 30 days of adopting that resolution.12Office of the Law Revision Counsel. 26 USC 6043 – Return Regarding Corporate Dissolution or Liquidation The 30-day clock starts on the shareholder vote date, not the state filing date. Exempt organizations and qualified subchapter S subsidiaries don’t file Form 966.13Internal Revenue Service. Form 966 – Corporate Dissolution or Liquidation
Every dissolving business also files a final income tax return for the year it closes, with the “final return” box checked near the top of the form. Partnerships filing Form 1065 check the “final K-1” box on each Schedule K-1 issued to partners. Corporations use their standard income tax return with the final return box checked.14Internal Revenue Service. Closing a Business
To close your Employer Identification Number account, send a written letter to the IRS that includes the business’s legal name, the EIN, the business address, and the reason for closing the account. If you still have the original EIN Assignment Notice (CP 575), include a copy. Mail the letter to the Internal Revenue Service, Cincinnati, OH 45999.14Internal Revenue Service. Closing a Business
Winding Up, Distributions, and Records
A dissolved Alabama entity continues to exist for the purpose of winding up its affairs. It can collect debts owed to it, settle remaining obligations, and distribute what’s left. It cannot take on new business.
Remaining assets get distributed in a set priority: unpaid wages and taxes first, then secured creditors, then unsecured creditors, then preferred stockholders, and finally common stockholders or LLC members. Owners don’t take distributions until creditor claims are paid or adequately provided for.
Don’t throw records out the day the dissolution is final. Tax returns and supporting documents should be kept for at least seven years after the final return is filed. The IRS’s standard audit window is three years, extends to six years if income was substantially underreported, and has no time limit where fraud is involved. Employment and payroll records should be retained for three to seven years after the last employee is terminated, depending on the record type.
What Happens If You Never File
Skipping dissolution doesn’t make a business quietly go away. The entity stays on Alabama’s active rolls, the business privilege tax keeps accruing each year, and annual report obligations continue.6Alabama Department of Revenue. What Taxpayers Must File an Alabama Business Privilege Tax Return The state may eventually administratively dissolve the entity for noncompliance, but that doesn’t erase the accumulated tax debt or reporting obligations that built up in the meantime. Filing proactively is cheaper than waiting for the state to act.15Atlas Alabama. Steps to Closing a Business