When a business idea runs its course or partners in a venture simply cannot agree on how to continue running a company, it is often time to close a business for good. However, many business owners do not realize that very much like marriage and divorce, creating a business is often much simpler and easier than dissolving it.
Unfortunately, the parallels don't end there. Like divorce, if a business dissolution is not carefully planned and executed, it can leave business owners and others vulnerable to costly consequences later on. If you face the difficult process of closing your business, it is always wise to make sure that you have all the guidance and understanding you need to make sure that the dissolution is fair and complete, for every party's sake.
Do your business articles affect the dissolution?
If your company has organizational documents, then it is likely that some portion refers to its dissolution. For sole proprietors, there is no one to inform or obtain consent from, as unpleasant as it may be. If your business is a general partnership, then you must inform your partner of your intent to withdraw from the business, and it is wise to do so in writing.
For businesses with organizational documents, like written partnerships, corporations, or LLC's, it is important to consult with the sections detailing how to dissolve the business. If you founded the business properly initially, you should have these documents on hand, and the secretary of state for your state should also have a copy.
Whom must you inform?
Beyond informing any other business owners of your intent to dissolve the company, an number of other institutions should receive documentation of the dissolution.
First, it is wise to file the dissolution with the state. By doing so, you deter yourself and any other parties from incurring more debt on behalf of the business. Once you file the dissolution properly, creditors receive notice and will not lend to the business.
You must also inform local and federal tax agencies about the dissolution. As a business owner, you are still responsible for the tax burdens of the current year and possibly the previous year, and you must settle these properly.
You should also inform your creditors and those who may owe you money, and devise a plan to satisfy these obligations.
Be sure that you have the guidance you need
Failing to dissolve your business properly may create huge issues for you and other business owners further on down the road, causing undue harm to those relationships and possibly incurring serious financial burden.
With legal counsel from an experienced business law attorney, you can protect your rights and the rights of other business owners, ensuring that your business is dissolved fairly and professionally.