How to Legally Dissolve a Business in Arizona Without Future Liability

Phoenix Business Lawyer Guide

Dissolving a business isn’t as simple as locking the doors and walking away. In Arizona, there are specific legal steps you must follow to protect yourself from future liability. Whether your business was successful or struggling, closing it down properly can prevent lawsuits, tax penalties, or creditor claims down the road.

This guide, written from the perspective of an experienced Phoenix business lawyer, walks you through the legal steps to dissolve your business the right way so you can move on without any loose ends.

Step 1: Review Your Business Structure and Governing Documents

Before taking any action, it’s important to understand your business’s legal structure. The dissolution process varies depending on whether your entity is an LLC, corporation, or partnership.

For LLCs:

Check your Operating Agreement. Most agreements include a dissolution clause outlining how members vote to dissolve, distribute assets, and handle liabilities.

For Corporations:

Review your Articles of Incorporation and Bylaws. You’ll typically need a board resolution and shareholder vote to approve dissolution.

If you don’t have an internal agreement in place, Arizona law (A.R.S. § 29 for LLCs and A.R.S. § 10 for corporations) provides default procedures.

Step 2: Vote to Dissolve and Document the Decision

Once you confirm the internal rules, follow the appropriate voting process.

LLCs: Members vote according to the Operating Agreement or a majority vote if none exists.

Corporations: The board of directors proposes dissolution and shareholders vote to approve it.

Document the vote in written meeting minutes or a consent resolution, and keep these records on file. These documents serve as evidence that the dissolution was authorized properly.

Step 3: File Articles of Dissolution With the Arizona Corporation Commission (ACC)

To make the dissolution official, file the required forms with the Arizona Corporation Commission.

For LLCs:

File Articles of Termination using Form L025.

For Corporations:

File Articles of Dissolution using Form CF0039.

These forms must be submitted with a filing fee (typically $25) and may require expedited service fees if needed. You can file online or mail the documents to the ACC.

Pro tip: A Phoenix business lawyer can ensure the forms are completed accurately to avoid delays or rejections.

Step 4: Notify the Arizona Department of Revenue (ADOR)

Dissolving your business doesn’t end your tax obligations automatically. You must close your tax accounts with the Arizona Department of Revenue and submit a Final Transaction Privilege Tax (TPT) Return and any other applicable tax forms.

Steps include:

Filing a final income tax return (corporate or partnership).

Checking the box that indicates it’s a “final return.”

Paying any outstanding state taxes.

Closing your withholding and sales tax accounts, if applicable.

To protect yourself from future audits or penalties, make sure the ADOR knows your business is officially closed.

Step 5: Cancel Your Business Licenses and Permits

Many businesses in Phoenix and surrounding areas operate with state, county, or city licenses. These may include:

Phoenix business licenses

Health or liquor permits

Contractor registrations

Sales tax permits

Failure to cancel these can result in unnecessary renewals, late fees, or even legal action. Notify each agency that your business has ceased operations, and request formal cancellation.

Step 6: Resolve Debts and Notify Creditors

Arizona law requires that you notify creditors of your business’s dissolution and give them a chance to file claims. This helps prevent future lawsuits.

What to do:

Send written notice to known creditors with a deadline (typically 120 days) to submit claims.

Pay off valid debts using the business’s remaining assets.

Reject invalid or disputed claims in writing.

This process helps limit your liability for future claims and shows that you acted in good faith.

Step 7: Distribute Remaining Assets to Owners or Shareholders

After debts are paid, you can distribute any leftover assets to business owners, partners, or shareholders. This must be done according to your internal agreement or Arizona law.

LLCs usually distribute assets according to ownership percentages, while corporations distribute based on share classes.

Important: Do not distribute assets before settling debts. Creditors come first, and improper distribution can result in personal liability.

Step 8: Maintain Business Records

Even after dissolution, you should retain your business records for several years—usually at least 3 to 7 years. These include:

Tax returns

Final bank statements

Dissolution filings

Debtor and creditor communications

This documentation protects you in case of an audit or legal dispute.

Why Work With a Phoenix Business Lawyer?

Even a small mistake in the dissolution process can result in unexpected tax bills or lawsuits. A skilled Phoenix business lawyer can help:

Ensure you follow Arizona law step-by-step

Draft or review dissolution resolutions

Handle creditor notices and claim disputes

File dissolution documents correctly

Close out your tax accounts and licenses

Having a legal professional on your side gives you peace of mind—and protects your personal and financial future.

Final Thoughts

Shutting down a business in Arizona isn’t just about ending operations—it’s about doing so legally and cleanly. From filing the right forms with the state to handling debts and taxes, each step matters. If you miss one, you could be dealing with problems long after your business has closed.

Working with a Phoenix business lawyer ensures you meet all legal requirements, avoid personal liability, and walk away with confidence.