There are instances when some businesses choose to shut down, regardless of the cause. But stopping your commercial operations alone won’t end the corporation’s existence. Until you formally disband the company, the corporation will still be recognized as a legitimate business entity.
You can accomplish a startup shutdown with professional help. Once the organization is dissolved per the law, you are free to go on with your life, confident that everything has been resolved properly, and begin your next project without any obstacles. Here is how to do it and move on with your life.
Organize a Board Meeting
State laws differ, but most call for a board vote to be taken to sanction the dissolution formally. It is advisable to follow this procedure even if it is not mandated in your state because doing otherwise could result in future legal repercussions.
The vast majority of corporations will need board approval for a decision like this, as required by the corporate bylaws. Investors must realize that the dissolution is in their best interests; otherwise, obtaining a majority vote may be challenging.
Submit a Certificate Of Dissolution
Following a vote by the board of directors and shareholders to approve the dissolution, you can formally file the required paperwork with the Secretary of State, where the company was incorporated. Getting this documentation should be relatively straightforward.
Some states have a Corporation Agency, while others refer to it as a Corporation Commission or Incorporation Bureau. Before submitting the form, confirm all of the fees and filing prerequisites. Depending on the state, you can submit your paperwork in person, online, or by mail. You can contact Goodbye Startup to help you with this process.
Inform The IRS
After submitting the dissolution documents to the state, you must notify the Internal Revenue Service of your decision. You still owe taxes even after business closure and must still pay all of your state and federal taxes if you operated the business the entire year. It is possible to carry over the corporate gains, losses, credits, and deductions for S corporations to the shareholders’ tax returns. Ensure you research how to dissolve a business for further details on the precise forms to submit and the procedure that the IRS requires.
Notify The Creditors
You must formally inform each creditor of the corporation’s impending dissolution. Mail them a letter with a claim submission address on it. Give claim submissions a deadline, typically 120 days after sending the notice.
Each correspondence to creditors should conclude with a warning for dismissing unreceived claims. To ensure you are covered legally, your lawyer can create this statement for you. You might need to publish a notice about your decision to dissolve an LLC in the local newspaper in some states.
Distribute Assets And Close Down
It’s time to transfer the remaining assets to all owners after paying your taxes, closing accounts, and resolving claims. You should allocate assets based on ownership stake and notify the Internal Revenue Service of all payouts.