You’ve given this idea your best shot, but it’s time to cut your losses and move on. Maybe you have an idea with so much potential that you need to focus all of your energy without the distraction of your current business. While it might be tempting to just stop operations, there is a well-defined process that you must follow in order to dissolve your business.
Dissolution is a process that formally legally ends the existence of your business. You will go through this process in the state where you incorporated your business, as well as in any states where you foreign qualified.
What if I don’t follow formal procedures?
Failing to formally dissolve your business prevents the state from recognizing your company’s actual closure date. This means that your company’s tax burdens would continue to accumulate. Fees and penalties related to missed ongoing filing deadlines (such as annual reports) would also be imposed on your business. Avoid racking up debt and close your business properly.
What’s the process?
In order to formally dissolve your company, you will need to file a document called the articles of dissolution with the state in which you incorporated or foreign qualified.
Beyond the state level dissolution process, there are several other steps that your business should take upon deciding to cease operations. These typically include settling any debts with creditors and paying all year-to-date taxes owed to relevant state, local, and federal agencies. Properly dissolving your company can be a complicated, time-consuming, and in-depth process.
If your company has foreign qualified, and conducts business in a number of states, you will need to go through the dissolution process in each state.
Some of the dissolution process is dependent upon which structure you chose when you organized your business. Due to the rigid nature of their ownership structures, LLCs can be forced to dissolve for a number of different reasons from which corporations are typically “safe”. If an LLC suffers the death or “exit” of a member with significant equity, it may be forced to dissolve.
If you don’t keep up with the required paperwork of owning and operating a business, the government may force your business to dissolve. However, outside of a failure to address official compliance requirements, most reasons that would force a dissolution can be anticipated and addressed before dissolution is the only option.
Swyft can help!
The period immediately following a business closure can often be a sensitive and hectic time for owners. Our business dissolution service can free you from many of the formal dissolution processes, so that you can attend to your other personal and professional requirements. Signing up for our formal dissolution service can free you from nearly all of the responsibility associated with dissolution, ensuring that you will get through it correctly and efficiently. Contact us today!