Dissolving a Small Business
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Regardless of whether your company is a corporation, a limited liability company (LLC), a partnership, or a non-profit, there are a number of common things that must be done in order to legally dissolve your small business.
What Do I Have to Do In Order to Dissolve My Small Business?
There are several steps that you will have to take in order to dissolve your business in accordance with the law. These may vary a bit depending on the makeup of the company and which state(s) the company is qualified to do business in, but you will likely have to do the following:
- Vote to close the business, according to the bylaws in your company's organizational documents. If they do not include a voting procedure, you can follow the state's laws for dissolution
- File for dissolution with the state or states in which your company does business
- Cancel any permits, licenses, and fictitious business names used by the company
- Give notice of dissolution to any creditors as well as a new address where they can contact you or the other partners/shareholders
- Settle any outstanding debts owed by the company
- Close all bank, service and credit accounts under the company’s name.
- Distribute the company's assets among the owners. If you are going to sell any business property, you may also need to file additional forms with the IRS.
Because the laws for dissolving a business are different in each state, you should contact the office of the Secretary of the State or visit their website to get the exact filing requirements for the state(s) in which your company does business.
What If I Have A Business Partner or Partners?
Just because a business has ended doesn’t mean that the partnership(s) have as well; the partnerships can exist independently of the business. Therefore, if you wish to terminate the partnership as well as the business, you must inform your partners and the state about this decision in a separate forum.
How Is the Business Still Incurring Debt If I Dissolved It?
Dissolving a business means that the business is no longer a legal entity. However, if the business is still incurring debt, it may be because not all the necessary steps were taken or done properly. For example, the IRS and the state/local governments expect final taxes to be paid off before the business is considered closed.
This is especially important in partnerships, as each partner can create a business obligation, but all partners will bear the costs and debts associated with that obligation.
Do I Need an Attorney to Assist Me in the Dissolution of My Small Business?
Dissolving a company can be an extremely difficult time, both financially and emotionally, especially if there has been a breakdown of the relationship among partners. An attorney with business experience will be able to facilitate the dissolution process and make sure that your individual rights are protected.
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Last Modified: 06-19-2012 10:22 AM PDT
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