It is the end of the life of your company, so what do you do? You start the process that is called business dissolution. It might sound simple, and like everyone should know it, but many people don’t realize that it is the formal closure of a business with the state in which the business is registered. If you are at the end of the life for your company, then it is important to remember there are several steps to take before a business may be legally dissolved.
Simply put, you cannot just simply stop conducting business and wash your hands of it. There are steps and if you’ve never gone through the process, you might not know what to do. This is where a business dissolution lawyer is going to come in handy.
The Proper Way to Dissolve a Business
A lawyer is going to know all the steps you have to take in order to legally dissolve your business. The general process could look something like this:
- Voting to Close the Business: If a business has been operated as a corporation, LLC, or partnership, then all associates must be in agreement regarding dissolution. Often this is governed by either organization documents or state business statutes. The decision should either be recorded in the meeting minutes or through a written consent form. This simply allows for everyone to be on the same page and you can’t have someone backtrack on the choice.
- Dissolving the Business With State and Local Government: To properly dissolve a business, both the state and local government agencies will need to be notified. This is to ensure that the business owner will cease to be legally liable for business taxes and filing requirements. This also notifies creditors that the business cannot incur any further debt. Each state is going to have slightly different laws, which is why working with a lawyer is important.
- Notifying Creditors, Customers, and Employees: You have to notify all the necessary parties that your business is closing. Employees should know what to expect and they should be informed at least two weeks prior to the last day. Customers need to be informed with plenty of time to finish up orders or projects. If you can’t fulfill their needs prior to closing, then you should return deposits or payments for goods not delivered.
Dissolving a business isn’t easy. You need a dedicated team on your side to help you through the processes. If you are starting the process, then talking to a business dissolution lawyer is a great way to make sure you stay on track with everything you need during this process.