How to Handle a Business Dissolution
It is never an easy to end something, especially something as important and time-consuming as a business. Businesses require a lot of care, investment, and work. Individuals spend a significant amount of their time and lives building a business and making it run. However, there are circumstances that can lead people to decide to dissolve the company. Whether it is because of unprofitability, internal dispute, or a government ordained dissolution, there comes a time for a business to close. However, the process of actually ending a business can be quite complicated.
At Chung & Ignacio, Attorneys at Law, we understand how difficult it is to dismantle your business. We offer legal counseling and representation to protect your financial future. If you are going through a business dissolution, we have listed together a few steps you need to take to make sure everything is done properly.
Vote to Close Business
In companies that have more than one owner, the partners must come to a decision to end their business. Your organizational documents should list the technicalities of how many votes are needed in order to dissolve the business. In some cases, majority rules, while in other cases a two-third vote can suffice. You can also look up your state’s business statutes if the number is not specifically noted. Remember to record any decision in writing, whether through the minutes of a meeting or through written consent.
If you are the sole proprietor of a company, you do not need to worry about this step.
Alert the Government Offices
If you filed paperwork with the state when starting your business, you will need to file paperwork for a dissolution with the state as well. An example of this would be if you and your partner filed a “statement of authority” with the Secretary of State, you will have to file a “certificate of dissolution” when you end your enterprise. Filing dissolution paperwork can also help alert creditors and such of your decision.
Cancel Permits and Licenses
When you decide to end a business, it is imperative that you cancel any permit or license you may hold with the state or county. You can contact the agency or office who issued you the license or permit in the first place. It is important you do this so that others cannot use your license or permit for their own gain. If they did, you would be held responsible for what’s done under your name.
Let Your Creditors, Employees, and Customers Know of Your Decision
Much like letting the state and government know, it is important to notify your creditors, employees, customers, and anyone else who is a part of the business. This can include suppliers, service providers, banks, property owners, and lenders. This can help protect you from future debt or misunderstandings.
Settling Taxes and Debts
The most important step to take when dealing with taxes is to settle employment-related taxes. If you have employees, make sure you make your final payroll tax deposits. The federal and state employment tax authorities also need to be alerted of the decision to dissolve your business. You should make sure all the proper income and sales taxes are also filed. Finally, it is important to settle any business debts owed to different parties.
At Chung & Ignacio, we understand how difficult it is to navigate the tricky water of a business dissolution. In order to ensure your financial future is looked after, you should hire an experienced business law attorney. Our Rancho Cucamonga business litigation lawyers have helped countless of business owners dissolve their company. Call today at (909) 726-7112 to learn how we can help you.