Dissolution Information
Dissolution is the legal termination of a business entity. It can be voluntary (initiated by the owners) or involuntary (ordered by a court or imposed by the state for non-compliance). The dissolution process involves ceasing business operations, notifying creditors, settling outstanding debts and obligations, liquidating assets, distributing remaining assets to owners according to their ownership interests, and filing the appropriate dissolution documents with the state. Dissolution does not happen instantly; the entity continues to exist for the purpose of winding up its affairs even after articles of dissolution are filed.
Florida Legal Definition
For Florida corporations, dissolution is governed by Florida Statutes §607.1401 through §607.1440. Voluntary dissolution requires a board resolution and shareholder approval, followed by filing articles of dissolution with the Division of Corporations. For Florida LLCs, dissolution is governed by Florida Statutes §605.0701 through §605.0704. An LLC may be dissolved by consent of all members, upon an event specified in the operating agreement, by judicial order, or by administrative dissolution for failure to file annual reports. The filing fee for articles of dissolution is $35 for corporations and $25 for LLCs.
How It's Used in Practice
In practice, the dissolution process requires careful attention to creditor obligations, tax filings, and contract termination. Attorneys assist with preparing a plan of dissolution, notifying known creditors, publishing notice to unknown creditors, filing final tax returns, canceling licenses and permits, and distributing remaining assets. Failure to properly dissolve can leave owners personally liable for business obligations. Administrative dissolution, which occurs when a business fails to file annual reports, can be reversed by filing the delinquent reports and paying a reinstatement fee.
Key Takeaways
- Dissolution formally ends a business entity's legal existence.
- Can be voluntary, judicial, or administrative (for non-compliance).
- Florida corporations: §607.1401-1440; LLCs: §605.0701-0704.
- Requires settling debts, distributing assets, and filing dissolution documents.
- Improper dissolution can leave owners personally liable for business obligations.
Disclaimer: The information and opinions provided are for general educational, informational or entertainment purposes only and should not be construed as legal advice or a substitute for consultation with a qualified attorney. Any information that you read does not create an attorney–client relationship with Barnes Walker, Goethe, Perron, Shea & Johnson, PLLC, or any of its attorneys. Because laws, regulations, and court interpretations may change over time, the definitions and explanations provided here may not reflect the most current legal standards. The application of law varies depending on your particular facts and jurisdiction. For advice regarding your specific situation, please contact one of our Florida attorneys for personalized guidance.
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