Running a business requires a lot of time and dedication. Once you’ve built a successful business, it can be hard to walk away. Sometimes though, that’s exactly what needs to happen. There are several reasons why you might want or need to dissolve your business. Here are some of the basic tasks to get you started in the process of dissolving your business.
Talk to your business partners and stakeholders - including employees
The first step is to meet with all stakeholders of the company. Once everyone is present, talk about why you want to dissolve the business. The dissolution of the business, especially if there’s more than one owner, will require unanimous approval. If full approval has been given, the dissolution may proceed. Now is the time to inform all employees so that they can search for other opportunities.
File your final return and any other related tax documents
Once you’ve made the decision to dissolve the company, you'll need to file your final income tax return and any other related tax documents. Remember that even though no profits will be distributed after the dissolution of the business, you'll still need to pay taxes on anything that’s owed before dissolving. The requirements will differ depending on which kind of status your business is (i.e. sole proprietor, partnership, or corporation). You can find the requirements for each here.
File Articles of Dissolution
Once the proper tax documents are filed, and your state government has verified your taxes are all paid up, they will send you a Certificate of Authority giving you consent to dissolve your business. You can then file articles of dissolution. You can do that through your state government or through the IRS. Either way, you'll need to provide information about all partners in the business, if there are any outstanding debts, etc. If dissolving a corporation, you’ll also need to provide financial information on any liquidation of assets.
For more information on which forms are needed, click here.Notify Your Customers
In some cases, you’ll need to make sure your customers know that your company will no longer be in business. Make a public announcement and put a notice on your website to inform people of the dissolution. Be honest about why you’re shutting down, as well as any customer requirements for outstanding orders or payments. This will give your clients time to find an alternative and leave them with a positive impression of your business.Keep Your Records Organized
Even after the business is gone, you’ll still need to keep your records organized and well-filed. This includes things like financial records, tax returns, and other related documents so that you don't run into any issues down the line with outstanding debt or other legal issues. You should also keep all paperwork showing the dissolution of the company. In doing so, you’ll have proof that the company was dissolved legally if the need ever arises.
Dissolving your business can be time-consuming, and it requires many tasks to be completed. You need to make sure you’re making the right decision for all parties involved with the business, but also for yourself. R&G Brenner can help you figure out what kind of dissolution makes sense for your particular situation and help you do it the right way. You can talk to one of our tax professionals one-on-one by scheduling a free consultation with us today.