Dissolving a business is not as easy as simply stopping operations. There are numerous legal steps that you must take to wind up and close your business. If you do not formally dissolve your business, you may be responsible for annual fees and taxes.
The first step is to obtain approval from the business owners or members to dissolve. Then, you must prepare a certificate of dissolution and file it with the state. You should file it in all states where you are registered to do business. You should also send notice to the Internal Revenue Service that you have dissolved your business.
You must also take four more steps to wind up your affairs. Your business must settle debts with creditors and inform vendors and suppliers that you are closing. Creditors only have a certain period of time to file claims and collect their debts. You may have a legal obligation to notify employees if dissolving a business will result in layoffs.
Finally, you would distribute the business assets to the owners or members. Each owner is entitled to their legal share after creditors have been paid.
You would likely need the advice of an experienced business attorney in dissolving and winding down your operation. You may have issues with creditors or disputes among owners about how much they should receive. Your attorney would help you execute the actual steps and provide you with legal advice that could make dissolution a more orderly process, reducing the risk of litigation.
The Primum Law Group Works with small businesses to handle their corporate law needs during all stages of their operations. Call us today at 415.293.8042 or reach out to us online to learn more about how we can partner with you.