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Friday, March 23, 2018

Dissolving Your Business

What paperwork do I need to file to dissolve my business?

Closing your business is not as simple as just shutting the doors.  If you have decided to close your small business, you will need to take steps to ensure it is dissolved in the correct legal manner.  Failure to properly dissolve the business could result in ongoing tax liabilities and potential litigation by outstanding creditors.  Our NYC business law lawyers at Thomas M. Lancia PLLC offer an overview of the steps you should follow to dissolve your business.

Dissolving the Corporation or LLC

You will need to dissolve your corporation or limited liability company in order to close the business officially.  If your business is operated by a corporation, all shareholders must approve of the dissolution. Similarly, for businesses run under an LLC, all members must approve.  Corporate formalities typically dictate that the board of director’s draft and approve a resolution of dissolution. All dissolution actions for a corporation and LLC should be in writing and recorded in the business records.  

Notifying the State of Your Dissolution

You will need to file your dissolution paperwork with the state in which you are incorporated or formed.  Every state has its own unique requirements for dissolution, with some states requiring that you first notify your creditors and resolve claims before filing to dissolve.  

In New York, businesses seeking a dissolution will need to obtain written consent from the Tax Department.  The Tax Department will want to first see that all of your returns and payments are current. It will then issue the necessary consent to dissolve the corporation.  With that document prepared, you can then prepare a Certificate of Dissolution to file with the state department.

Filing Your Dissolution with the IRS

You must notify the IRS of your closure.  You will need to file an annual return for your last year of operation and check a box on the form that this will be the final return.  You must also file all final employment tax returns.

Notifying Creditors

You will need to notify any creditors of your closure. You can set out a deadline for creditors to assert any claims. Once the deadline passes, claims may not be honored. You will typically need to negotiate with creditors to settle outstanding claims. You may alternatively wish to file a bankruptcy case. Your attorney can help you to resolve your debts and distribute the remaining assets within the company so that you comply with local, state, and federal law. If you need assistance dissolving your business, contact the experienced business law attorneys at Lancia Law.


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