Here’s a rundown of the primary procedures you’ll need to follow to dissolve your Florida nonprofit company. This article solely discusses the most fundamental kind of voluntary dissolution of an existing Florida 501(c)(3) nonprofit company. Other forms of nonprofits have distinct regulations and processes, as do other circumstances such as forced dissolution.
Do you need to dissolve your Florida nonprofit corporation? Here’s a short rundown of the essential processes involved in dissolving and winding up a 501(c)(3) nonprofit company in Florida.
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Closing begins with dissolution, and you will need a determination to dissolve to do so. You’ll also need a distribution plan, which outlines how the nonprofit’s leftover assets will be allocated once all creditors have been paid. With a resolution and a strategy in place, Florida law allows for voluntary dissolution in the following ways:
If your nonprofit has members, by action of the directors followed by a vote or other permission of the members; otherwise, by a vote of the directors.
The board must first approve the resolution to dissolve and then present it to the members under the first approach. Members then gather and vote to adopt the resolution. Members may also grant unanimous written approval for the resolution without meeting. The process for approving the distribution plan is roughly the same.
The board must adopt the resolution to dissolve under the second approach. In general, the resolution must be passed by a majority of the directors who are in office at the time. The method for approving a distribution plan is the same.
Make careful to accurately document the decision to dissolve, the plan of distribution, the votes of the directors, and, if required, the votes or written consents of the members. This information will be required for filings with the state and the IRS.
After your board (and, if appropriate, voting members) has authorized the dissolution, you must submit articles of dissolution with the Division of Corporations of the Department of State (DOC). The articles of dissolution must include the following:
If your nonprofit has members entitled to vote on dissolution, either (a) the date of the member meeting at which the resolution to dissolve was adopted and a statement that the votes cast were sufficient for approval, or (b) a statement that such a resolution was adopted by written consent and executed in accordance with section 617.0701 of the Florida Not For Profit Corporation Act; and if your nonprofit does not have members entitled to vote on dissolution, either (a) the date of the member meeting at which the resolution to dissolve
The DOC website has a form for the articles of dissolution, as well as instructions and a form for a cover letter. The basic filing cost is $35.
After your nonprofit has legally approved dissolution, it continues to exist simply to handle some last tasks known collectively as winding up the firm. Winding up is primarily concerned with paying off any obligations and then distributing any leftover assets, although additional responsibilities may be included.
In general, you may distribute money and property only after you’ve paid off all of your nonprofit’s obligations. There are various regulations that must be followed while distributing assets. For example, your nonprofit is required to return any things leased to it on the condition that they be returned upon dissolution. A dissolving 501(c)(3) organization must also disperse its remaining assets for tax-exempt purposes after paying off obligations and repaying borrowed assets. In reality, this generally entails donating assets to another 501(c)(3) charity or organizations. Other distribution criteria, such as those in your distribution plan, may also apply. If you have any concerns, you should speak with a lawyer.
You must also submit a copy of your distribution strategy with the DOC.
Giving notice to creditors and other claims is another aspect of winding up your dissolved charity. It is not required to provide notification. However, doing so will assist reduce your obligation and enable you to make final dispositions of residual assets more securely. After dissolution, you may send notification to known claims. You may also notify unknown claimants by submitting a dissolution notice with the DOC or advertising in a publication. The package for the articles of dissolution includes a form for notifying the DOC, which is accessible for download on the DOC website.
You must submit IRS Form 990 or IRS Form 990-EZ for federal tax reasons. Schedule N (Liquidation, Termination, Dissolution, or Significant Disposition of Assets) must be completed, as well as copies of your articles of dissolution, resolution to dissolve, and plan of distribution. When filling out Form 990 or Form 990-EZ, tick the “Terminated” box in the header section on Page 1 of the return.
On the DOC website, you may discover further information such as forms, postal addresses, phone numbers, and filing costs.
Be advised that dissolving your organization will not halt any lawsuits that have already been filed. Furthermore, lawsuits may be filed against your organization for up to four years after its dissolution.
This article only covers the most fundamental procedures of voluntary dissolution once your organization has begun operations. There are several further, more specialized regulations that address topics such as:
uninvited dissolution
Non-typical NGOs should be dissolved before they begin activities.
what precise goods should be included in a distribution plan
providing enough notice of member and director meetings
the number of votes necessary to support dissolution
Specific measures to authorize dissolution in writing without a meeting; what information must be included in communications to creditors and claimants; and how to react to legal claims after dissolution.
Furthermore, your articles of incorporation or bylaws may incorporate restrictions that apply instead of or in addition to state law. You are highly advised to speak with a lawyer for further information on these and other issues.
