Dissolving your Business
Sometimes it is necessary to dissolve a business. Some businesses fail, some must be dissolved because of a buyout or merger, some come to an end because the business owners choose to retire or move on to other endeavors, and, in some cases, business owners find that they cannot agree on business decisions and no longer wish to work together. While, for a Sole Proprietor, dissolving a business is as simple as ceasing further business activity, the situation is a bit more complicated for Limited Liability Companies and Corporations.
Unless you are the sole owner of the entity in question, the dissolution of the business will require the consent of the other owners. The dissolution procedure should be defined in the Bylaws of a Corporation or in the Operating Agreement of a Limited Liability Company. While formal dissolution requirements vary between the two types of business entities, both will need to meticulously document the decision to dissolve the business, and the subsequent approvals by the required parties. Once these formalities are complete you will need to file the Certificate and/or Articles of Dissolution with the appropriate state authorities so they officially recognize the dissolution.
Before the dissolution of the business is complete, you will need to resolve any remaining financial obligations. The first step is to file the appropriate tax forms, settling the company's federal, state and local tax obligations. After paying any taxes that are owed, it will be necessary to satisfy the claims of creditors. This is usually done by notifying creditors of the (intended) termination of the LLC or Corporation, and outlining a deadline for submitting claims. Once the claims of creditors are resolved, you can proceed to liquidate the remaining assets of the business, distributing the proceeds according to the percentage of the dissolving corporation or company owned by each owner. This step completes the dissolution process.
The above steps are an overview of how to dissolve a business, but every business is unique and there may be other things to think about. It's a good idea to talk to a lawyer for legal advice whenever you need guidance.
If you are a small business, Office Tax Services can help you to go through the process smoothly.
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