How to Dissolve a Business in Mississippi: LLC and Corporation Guide

How to dissolve a corporation in Mississippi

The steps below follow the sequence required under the Mississippi Business Corporation Act.

Step 1: Board of directors resolve to recommend dissolution

The board must act before shareholders can vote. They need to adopt a proposal recommending dissolution and submit it to the shareholders. The resolution should be documented in the corporate minutes—record the date, names of directors present, vote count, and the specific language recommending dissolution. Keep these minutes in the corporation's permanent records.

Step 2: Hold a shareholder vote to approve dissolution

Shareholder approval requires a meeting. If your articles of incorporation specify dissolution procedures, vote according to them. If it doesn’t, a simple majority of shareholders entitled to vote is required. Review your bylaws before calling the meeting.

Document the meeting date, shareholders present or represented, total votes entitled to be cast, votes cast in favor, votes cast against, and the outcome. A written consent signed by shareholders in lieu of a meeting is acceptable, but under the state default, this route generally requires consent of all shareholders entitled to vote, unless the bylaws specify otherwise.

Step 3: Wind up corporate affairs and notify creditors

Winding up means the corporation finishes remaining business obligations and converts assets to pay what it owes. The board typically oversees this process.

Creditor notification is a legal obligation. To cut off known claims, written notice to each known claimant must:

• Describe the information that must be included in a claim
• Provide a mailing address where the claim may be sent
• State the deadline, which may not be fewer than 120 days from the effective date of the written notice
• State that the claim will be barred if not received by the deadline

Notices that don't include all four elements won't trigger the statutory bar.

To cut off unknown claims, your corporation may publish notice once in a newspaper of general circulation in the county of its principal office. The notice bars unknown claims if not made within three years of publication.

Your corporation has not completed winding up until it: 

• Collects all outstanding accounts receivable
• Pays or formally disputes all known debts and liabilities
• Sends written creditor notices containing all four statutory elements
• Terminates contracts, leases, and vendor agreements
• Issues final paychecks
• Closes corporate bank accounts and credit lines
• Cancels business licenses, permits, and professional registrations

Step 4: Handle tax obligations

File a final Mississippi corporate income and franchise tax return with the DOR and mark it as final. File final returns for any sales tax or employee withholding accounts as well. Pay any outstanding balances.

Federally, you must file Form 966, Corporate Dissolution or Liquidation, within 30 days of adopting the resolution to dissolve. To file your final federal tax return, file your entity’s standard tax form and mark the box that says “Final return.” You’ll also need to file final payroll tax returns and issue final W-2s to employees and 1099s to applicable contractors.

Per the DOR, a tax clearance letter certifies that a corporate entity has no outstanding tax liability for all periods. Tax clearance letters are available to corporations with existing corporate tax accounts current on all returns and payments. If you want a Tax Clearance Letter for your own records, request one through the TAP portal.

Step 5: File articles of dissolution with the Mississippi Secretary of State

File articles of dissolution through the SOS online portal. Be prepared to provide the following information:

• The corporation's full legal name
• Business ID number
• The future effective date (if applicable) 
• The date dissolution was authorized
• The number of votes entitled to be cast for dissolution and results of the shareholder vote

Filing your articles of dissolution costs $25, but always check the current fee schedule with the Mississippi SOS.

Step 6: Distribute assets

Assets go to shareholders only after all creditor claims are resolved. Distribution of corporate assets before satisfying creditors can expose officers and shareholders to personal liability.