Key Takeaways

  • Illinois corporations must file Articles of Dissolution Form BCA 12.20 with the Secretary of State to formally dissolve.
  • Dissolution can be voluntary, approved by directors and shareholders, or involuntary, ordered by a court or imposed by the state for noncompliance.
  • Before filing, corporations must settle debts, notify creditors, and file final tax returns with the Illinois Department of Revenue.
  • Dissolution does not automatically release a corporation from outstanding tax obligations or penalties.
  • Proper dissolution prevents continued annual report fees and franchise taxes from accruing after operations cease.

What is Illinois Corporation Dissolution? In order to dissolve a corporation in Illinois, the Articles of Dissolution Form BCA 12.20 must be submitted to the Secretary of State with the associated filing fees. The completed form may be sent in by mail or submitted in person.

What Is Illinois Corporation Dissolution?

A corporation in Illinois is officially formulated when the Illinois Secretary of State (SOS) approves your Articles of Incorporation paperwork. Following approval, the business is placed on a list as a corporation that is officially registered with the Illinois SOS. Once the Illinois SOS officially registers the corporation, the business must immediately begin reporting and filing their tax obligations. Failure to comply with required deadlines will subject the corporation to penalties.

If your corporation is officially registered with the Illinois SOS and you would like to close the company, there are necessary measures that you must take. The SOS must be notified of your intention to dissolve the corporation. They have certain requirements that need to be completed prior to officially closing the corporation.

Types of Dissolution in Illinois

Corporations in Illinois may dissolve either voluntarily or involuntarily.

  • Voluntary Dissolution occurs when shareholders and directors decide to end operations and file Articles of Dissolution using Form BCA 12.20.
  • Involuntary Dissolution may be imposed by the Illinois Secretary of State if a corporation fails to file annual reports, pay fees, or comply with legal obligations. Courts may also order dissolution if creditors file lawsuits and demonstrate that the company cannot meet its debts.

Why Do I Need to Dissolve an Illinois Corporation?

When an Illinois-based corporation officially becomes registered with the Illinois SOS, that corporation immediately is responsible for any obligations from the Illinois Department of Revenue or the Illinois SOS. If the corporation does not pay taxes or file reports, then that corporation may be held responsible for penalties which significantly increase with time. Therefore, unless the corporation has been properly dissolved, the business will be subject to all recurring penalties and fees.

Consequences of Not Filing BCA 12.20

Failing to properly dissolve a corporation leaves it vulnerable to ongoing tax liability, penalties, and annual franchise fees. Even if the business ceases operations, the Illinois Secretary of State continues to expect filings until dissolution is formally recorded. Unresolved obligations may lead to:

  • Accumulated late penalties for unfiled annual reports.
  • Administrative dissolution by the state, which damages business records.
  • Legal exposure if creditors pursue claims against an entity that was never formally closed.

What Do I Have to Do to Dissolve an Illinois Corporation?

There are several steps that need to be completed in order to properly dissolve a corporation in Illinois. For example, there are actions you need to take both before and after the dissolution process according to the Illinois SOS. These actions are largely dependent on a few factors, such as:

  • How much stock has been issued, if any?
  • What is the value of the stock?
  • What type of liabilities or debts does the corporation still have?

In Illinois, the process of dissolving a corporation is significantly easier if the company has not commenced business activity.

Filing Articles of Dissolution Form BCA 12.20

The central step in dissolving an Illinois corporation is submitting the Articles of Dissolution (Form BCA 12.20) to the Secretary of State. The form requires:

  • Corporation name and file number.
  • Date of incorporation and effective date of dissolution.
  • A statement confirming shareholder approval of the dissolution resolution.
  • Payment of the required filing fee.

Form BCA 12.20 may be filed by mail or in person in Springfield or Chicago. Processing usually takes about one to two weeks once the Secretary of State receives the form.

What Do I Have to Do Before I Dissolve an Illinois Corporation?

The following are some of the steps that are required in order to successfully dissolve a corporation in Illinois.

  1. Hold a Board of Directors meeting to officially record the resolution to dissolve the corporation. Remember, if a Board of Directors has been chosen then they must adopt a formal resolution to dissolve the corporation.
  2. The meeting minutes must be documented and retained in the company's official business records.
  3. If the corporation does not have a Board of Directors, then the incorporator(s) will have to apply for Dissolution of the Illinois Corporation.
  4. A shareholder meeting should be held to approve of the Dissolution of Illinois Corporation.
  5. If the corporation has issued stock, then the majority of its shareholders need to approve the plan to dissolve the business.
  6. Any approval actions should be properly documented and retained in the company records.
  7. All annual reports should be filed with the Illinois SOS. It is important to note that the Illinois SOS will not grant approval of the Dissolution of an Illinois Corporation unless all the required reports have been properly filed.
  8. Take care of any business debts.
  9. All creditors related to the corporation should be notified of the impending dissolution of the corporation. Provide each creditor a mailing address to submit any claims and provide a deadline date by which claims may be paid.
  10. Although not a legal requirement, a public notice of the Dissolution of an Illinois Corporation may be a good way to notify anyone who may have a claim against the business. The evidence of a public notification may be beneficial in case a claim against the company is made after the corporation has already been dissolved.
  11. Pay all the administrative fees and taxes that are owed by the corporation. The Illinois SOS will not approve the dissolution of the corporation until all outstanding taxes and fees have been paid.

Tax and Creditor Clearance Requirements

Illinois requires corporations to resolve outstanding financial obligations before dissolution. This includes:

  • Filing a final corporate income tax return with the Illinois Department of Revenue and checking the "final return" box.
  • Paying any remaining franchise taxes, employee withholding taxes, and sales taxes.
  • Notifying creditors in writing of the impending dissolution and providing instructions for submitting claims.
  • Distributing remaining assets to shareholders only after all debts and liabilities are satisfied.

How Long Does It Take to Dissolve an Illinois Corporation?

There are many actions that need to be completed before an Illinois corporation can be dissolved. This may include such items as:

  • Holding meetings
  • Distributing assets
  • Closing accounts

Therefore, the time it takes to successfully dissolve a corporation in Illinois will vary greatly. Once the necessary actions are completed, it takes about seven to 10 business days to process the Articles of Dissolution paperwork.

Post-Dissolution Considerations

Even after the Articles of Dissolution are processed, corporations should maintain records of:

  • Final tax filings.
  • Notices to creditors and evidence of asset distribution.
  • Proof of publication if a public notice of dissolution was issued.

Maintaining these records protects against future claims or audits. While processing time for BCA 12.20 may be only a week or two, the overall timeline to fully close out tax and creditor obligations often extends several months.

Frequently Asked Questions

  1. What is Form BCA 12.20?
    Form BCA 12.20 is the Articles of Dissolution required by the Illinois Secretary of State to formally close a corporation.
  2. Can Illinois dissolve my corporation without my consent?
    Yes. The state may initiate involuntary dissolution for failure to file annual reports or pay franchise taxes.
  3. Do I need tax clearance before filing BCA 12.20?
    Yes. Corporations must file a final return and resolve outstanding obligations with the Illinois Department of Revenue before dissolution is approved.
  4. How much does it cost to dissolve a corporation in Illinois?
    The Secretary of State charges a filing fee for Form BCA 12.20. Fees may change, so check the Illinois SOS website for current rates.
  5. What happens if I don’t dissolve my corporation?
    You remain liable for taxes, fees, and penalties until the corporation is formally dissolved, even if the business is no longer operating.

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