How to Dissolve a Nonprofit
By majority approval of your members or action of directors with a vote of members, a nonprofit can be dissolved. IRS confirms charities may provide consulting services for a fee, which are considered unrelated trades subject to tax.
- Find out how to dissolve a nonprofit in your state, which typically requires a vote, filing documents, and other tasks known as winding up.
- Some dissolution steps include holding a vote, recording the vote, determining a formal dissolution date, distributing assets, and notifying creditors to settle debts.
Dissolving a Nonprofit Organization in PA
To dissolve a nonprofit organization in PA, the process involves majority approval by members, action of directors followed by member vote, or directors voting if there are no members. Nonprofits in PA can charge fees for services, which are taxable income even if clients are nonprofits.
- Steps to legally closing a 501(c)(3) nonprofit in PA include member voting, filing state documents, settling debts, and distributing assets properly.
Closing a PA Corporation
To close a corporation in Pennsylvania, the completed Articles of Dissolution form must be provided to the Department of State, Corporation Bureau. A closely held corporation in PA has not more than 30 shareholders or is a statutory close corporation.
- Search business records in PA by sending a letter to the Bureau requesting a written search with the name and address of the entity.
Legal Steps for Closing 501(c)(3) Nonprofit
- Adopt a board resolution and submit it to members (if any), following bylaws for required votes. Stop operations, pay obligations, document asset distribution per IRS rules, transfer assets to exempt organizations, file final forms, and comply with regulations.