What you must do before dissolving your business

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What you must do before dissolving your business

On Behalf of | Feb 7, 2015 | Closely Held Businesses

Closing down your business does not have to be a sad time. Perhaps you want to retire. Or maybe you are ready to move on to new challenges, even though the business is financially healthy, and you do not want to sell to someone else. Of course, not wanting to deal with a struggling business is also a good reason to dissolve it.

Actually doing so is not as simple as shutting off the lights and hanging an “out of business” sign on the front door. Most business owners must take several steps before the company can be considered legally dissolved.

Sole proprietorships are probably the easiest businesses to end. There are no organizational documents to follow, and you likely will not have to file anything with the state. But more complex business structures, such as partnerships and corporations, must take these steps.

A business’ organizational documents, such as articles of incorporation or a partnership agreement, probably will contain rules for dissolution. For example, two-thirds of the voting shares may have to agree to dissolve the business. State law may also contain certain requirements, which an attorney can explain.

Businesses more complex than a sole proprietorship must file with the state notifying it of the dissolution. But even a sole proprietor may want to do so, to notify creditors that the business cannot incur and more debt. You will also need to notify state and local tax agencies, as well as the IRS.  Creditors also need to find out that you are closing.

These and other obligations can be handled with the help of a business law attorney.

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