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The basics of dissolving your business

On Behalf of | Jun 18, 2020 | Business Law |

Business owners may choose to close down their business for a multitude of reasons. The business may not have been as successful as anticipated it to be or the owners were unable to see eye-to-eye and felt that it would be best to go their separate ways. In any case, it is important that owners follow the appropriate steps when shutting the doors for the final time.

The specifics of closing down your business will depend on the business structure you chose during the business formation Generally, sole proprietors and general partners without a written agreement generally have the easiest time walking away, as they do not have to worry about any documentation.

Closing down a partnership with a written partnership agreement, an LLC, or a corporation, is more complicated as parties will need to follow the dissolution terms included the partnership agreement and the articles of incorporation and file dissolution papers with the state. You will also need to terminate any business licenses or permits you have to prevent other parties from essentially stealing your business identity.

If you choose to close down your business, the company will still be liable for the current year’s taxes, as well as taxes for the prior year. You should refer to the IRS’ checklist for business owners who are closing their business for further information on what you need to do tax wise when closing down your business. You will also need to notify creditors of your business closing and settle any claims with your creditors, collect money owed to the business, inform stakeholders and landlords about the closure, and sell any assets connected with the business.

A business law attorney can assist you with every step of the dissolution process, no matter what business structure your company follows.