Steps to dissolving a businessJune 10, 2016 1:35 pm Leave your thoughts
Business dissolutions can be emotional events, as well as professionally challenging. If you can no longer maintain owning and operating a company and are unable – or unwilling – to sell the business off, then dissolving the business is important to limit any future liability. Essentially, without dissolving your business, it remains an ongoing operation in the eyes of the law, meaning that it is liable for taxes, government fees and lawsuits.
By dissolving your business and settling all debts, you are officially giving notice to creditors and customers that your enterprise is a nonentity and thus protected from ongoing litigation or debts. So what are the steps to dissolving your business? Below is a guide to making sure your company is put to rest completely.
"Here is a guide to making sure your business is put to rest completely."
Vote to dissolve
The first step to dissolving a business to get all relevant partners to agree to the dissolution. Based on your organizational documents or partner contracts, this may require an official vote, where all parties with a controlling interest in the business are given an opportunity to speak up about the move. If a consensus or majority decision cannot be reached to dissolve the business, then a buyout of controlling shares may be needed. Otherwise, if the vote to dissolve is approved, it must be recorded in a resolution in the minutes of a meeting or with a written consent form.
File federal and state dissolution forms
Following an affirmative vote to dissolve, the business owner must obtain and fill out the appropriate dissolution forms for both the state and federal level. The forms will ask for identifying information as well as details about the dissolution. There may be a fee associated with filing for dissolution. Visit your state's secretary of state or corporations division website to find the appropriate dissolution form. If you are a corporation – as opposed to a LLC – liquidation forms may need to be filed with the IRS to show that all corporately-owned assets have been sold off.
Cancel registrations, qualification, business names and permits
Any registrations or certifications that were obtained through or for the businesses – versus those obtained by an employee personally and used in the business operations – must be canceled and cannot be claimed by the business owner of a dissolved entity. Depending on the exact registration, an application of withdrawal, certificate of termination of existence, termination of registration, or certificate of surrender of right to transact business may be needed.
Trademarks and patents may be retained even after the business is shuttered as these are transferable assets that, even if not being currently sold by a business entity, may still be able to earn the holder income. To learn more about business dissolution, contact The Law Offices of Donald W. Hudspeth, P.C.
Categorised in: Arizona LLCs, Asset & Liability Protection, Business Law, C-Corporations & S-Corporations, Contracts & Transactions, Dissolution & Partnership Disputes, Dissolving a Business, International Business Law, Starting a Business in Arizona
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