How to dissolve a corporation in Illinois

What does it cost to dissolve a corporation in Illinois?

Illinois has a small base filing fee, commonly around $5 for a corporation's Articles of Dissolution, but the number that varies is the franchise tax and any lapsed annual reports the Secretary of State settles at dissolution. Confirm the current fee, since corporation fees can differ from LLC fees.

Fees change; we confirm the current figure with the Secretary of State before we file. See the wider picture on the main corporation guide.

How do the board and shareholders approve dissolution?

An Illinois corporation dissolves through its governance structure in two moves under the Business Corporation Act. First, the board of directors adopts a resolution recommending dissolution. Second, the shareholders approve it, generally a majority of the outstanding shares entitled to vote.

Record both the board resolution and the shareholder approval in writing. Even a single-shareholder corporation completes both. That record supports the Articles of Dissolution and confirms the dissolution was authorized.

How do you dissolve an Illinois corporation, step by step?

1. Board resolution to dissolve. The directors recommend dissolution, recorded in the minutes.
2. Shareholder approval. Shareholders vote to approve, generally by a majority of shares, recorded in writing.
3. Settle reports and franchise tax. Bring the corporation's annual report and any franchise tax obligations current.
4. File Articles of Dissolution. Submit Form BCA 12.20 to the Illinois Secretary of State, Department of Business Services, and pay the fee.
5. File IRS Form 966 within 30 days. The Corporate Dissolution or Liquidation form, filed within 30 days of adopting the resolution or plan.
6. Wind up and file final returns. Notify creditors, settle or provide for debts, distribute any remainder to shareholders, file the final federal return marked final, and close the IRS business account.

What is Form BCA 12.20?

An Illinois corporation files Articles of Dissolution, Form BCA 12.20with the Illinois Secretary of State, Department of Business Services. The document names the corporation, states the date dissolution was authorized, and confirms shareholder approval. The Secretary of State will also expect the corporation's annual report and franchise tax obligations to be settled as part of dissolution. If you are closing an Illinois LLC rather than a corporation, see how to dissolve an LLC in Illinois.

Illinois franchise tax

Illinois corporations have historically owed an annual franchise tax administered by the Secretary of State, separate from Illinois corporate income tax. A corporation that let annual reports lapse may have a franchise tax balance to settle before or at dissolution. Illinois has been phasing changes to this tax, so confirm the current position, but as a practical matter, bringing annual reports and any franchise tax current is the gate to a clean Illinois corporate dissolution.

IRS Form 966 and final returns

Form 966, “Corporate Dissolution or Liquidation,” is the federal filing unique to corporations closing down. A dissolving Illinois corporation files it with the IRS within 30 days after the board and shareholders adopt the resolution or plan to dissolve. Because that clock runs from the approval, not from your state filing, it is easy to complete the Illinois side and forget the federal one.

A dissolving corporation also files a final federal income tax return with the “final return” box checked, Form 1120 for a C-corp, Form 1120-S for an S-corp, plus its final Illinois corporate income tax return. We cover the whole federal sequence on the final tax return page.

Your EIN and the IRS account

Here is the step almost everyone misses: the EIN. The IRS does not cancel an EIN. The number is permanent and never reassigned. What you do instead is ask the IRS to close the business account behind it, and the IRS will not close it while final returns are outstanding. The Illinois filing gives the IRS no signal at all.

How long does it take in Illinois?

Bringing lapsed reports and franchise tax current can drive the timeline for a neglected corporation; once that is settled, the Articles of Dissolution are quick to file, though Secretary of State processing times vary. Form 966 and the IRS account closure run on the federal clock, generally several weeks each and independent of the state filing.

Confirm current Secretary of State fees and processing times before relying on a date.

Rather have your Illinois corporation closed properly?

We settle lapsed reports and franchise tax, file the Articles of Dissolution with the Secretary of State, make sure Form 966 lands inside its 30-day window, and, if your corporation ever had an EIN, close the IRS business account too. If you're not sure which package is yours, a specialist is on WhatsApp 24/7 and will tell you straight.

This page is general information about dissolving an Illinois corporation, not legal or tax advice. Final-year corporate tax, insolvency, and contested claims can have significant consequences, confirm your specific situation with a qualified attorney or tax professional before you act.