WHAT IS CORPORATE WINDING DOWN, DISSOLUTION AND TERMINATION?

Dissolution is the process of formally winding down or terminating your business. In addition to a final accounting of the assets and liabilities, you will have to file the necessary paperwork with your state. A proper dissolution should also be documented with the proper corporate resolutions.

 

HOW DO I CLOSE MY LLC OR CORPORATION?

When closing an LLC, corporation, or nonprofit, you’ll need to follow these steps:

  • Make sure all owners are on the same page and agree to close, creating a written agreement stating so.
  • File dissolution documents (this is where we can begin to help).
  • Cancel all permits, licenses, and registrations.
  • Comply with all employment and labor laws regarding employee payments after closing your business.
  • Resolve any financial obligations.
  • Maintain tax and employment records in case you need to reference them in the future.
  • Find more details regarding the dissolution requirements by state here.

 

WHAT HAS TO BE FILED TO FORMALLY CLOSE MY BUSINESS?

You will need to file the necessary paperwork in the state where you incorporated and any states where you’re foreign qualified to do business. Many states call it a Certificate of Dissolution or Articles of Dissolution. Some states will not allow this until there is confirmation that all due tax payments have been paid.

 

WHAT HAPPENS IF I DON’T FORMALLY DISSOLVE MY BUSINESS?

Just because you decided to shut down does not end the business’s filing and tax obligations. You will need to formalize the closing with the IRS and the state entities. To make sure you are no longer on the hook for paying annual fees, filing annual reports, and paying business taxes, you must file your official documents with the state. Failing to do so allows for fees and fines to mount for which you can be personally liable.

 

WHAT IS THE DIFFERENCE BETWEEN WITHDRAWAL AND DISSOLUTION?

Withdrawal is a term that generally means you withdraw from doing business in a particular state, but not wrapping up business overall. If you are foreign qualified to do business in another state, but no longer do so, you would file a withdrawal to terminate your reporting requirements in that state without terminating your entire business.

 

WHAT IS A WITHDRAWAL?

If you are registered to do business in a state, but no longer wish to do so, you file a withdrawal to terminate you authority to do business there. More importantly, it can put an end to your reporting and taxing requirements with that state.

 

WHAT IS THE WITHDRAWAL REQUIREMENT FROM ANOTHER STATE?

Many states will require you to be in good legal standing, including the payment of all due fees and taxes before you can formally withdraw.

 

WHAT HAPPENS IF YOU DO NOT APPLY FOR A FORMAL WITHDRAWAL?

Just because you decided to stop doing business in a specific state does not end the business’s filing and tax obligations in that state. You will need to formalize the withdrawal. To make sure you are no longer on the hook for paying annual fees, filing annual reports, and paying business taxes, you have to file your official documents with the state you are leaving. Failing to do so allows for fees and fines to mount for which you can be personally liable.

 

WHAT IS THE DIFFERENCE BETWEEN WITHDRAWAL AND DISSOLUTION?

Dissolution applies when you are shutting down the entire business and not just withdrawing from doing business in one state.

 

Always consult your CPA and Lawyer for any business decision.