HOW TO END YOUR BUSINESS?
Closing a corporation is commonly known as “dissolution.” Just as a company files Articles of Incorporation when starting a business, so too must Articles of Dissolution be filed when closing a business. Ending a business is no quick and easy matter. Dissolution requires strict adherence. Typically, there are six steps required to dissolve a business entity:
Step 1: Obtain the Consent and Approval of Company Owners. Call a board meeting. The bylaws of a corporation or the LLC operating agreement ordinarily outline the dissolution process and the proper method to obtain approval.
Step 2: File the Dissolution Certificate. Certificates must be filed in the state of incorporation. If the company is registered to transact business in another state, a certification must be filed in that state as well.
Step 3: Obtain Federal and State Tax Clearance. Certain tax obligations remain after a business has dissolved. The IRS and the state in which you operate have requirements to formalize the closing of operations. You must notify the IRS of the dissolution and pay any taxes due. Be sure to consult your accountant.
Step 4: Notify Creditors You Have Dissolved the Business. Notification must be made by mail and must include information about submitting claims. Some states require notice by publication. Consult an attorney in your state for notice requirements.
Step 5: Settle All Claims Submitted by Creditors. A competent attorney can help assist you on the consequence of rejecting claims.
Step 6: Distribute any Remaining Assets to Company Owners. Assets are generally distributed according to the proportion of ownership interests.
NOTE: Business should remember to close any open lines of credit, service accounts and terminate licenses.
Get Help To Dissolve Your Business
Given this step-by-step process, it is not uncommon for dissolution to take months to complete. In order to swiftly execute this complex and lengthy process, business owners should contact a competent business attorney early to facilitate their dissolution’s. For more information contact Brown & Charbonneau, LLP (B&C) today, by calling 714-505-3000 or contact us online to learn more about what we can do for you. Irvine’s top-rated business, corporate litigation and trial law firm, we provide the experience, trial skills, and resources of a large firm, but with the personal, attentive client service of a smaller law firm.