Do You Need To Dissolve a Business?

Our Chico business attorney can manage the entire process.

Are you voluntarily deciding to dissolve your business? Or has an external circumstance dictated that you now need to close your business venture? Regardless of why, it's important to conclude the dissolution properly. Otherwise you may run the risk of being personally responsible for any remaining debts your company incurred. There are specific requirements per the law, and they also depend on the type of business that is being dissolved. It is important to consult with a lawyer in Chico with extensive business law experience to help guide you to safely and completely close your business and eliminate any future legal threats, tax issues and other problems.

Chico Business Dissolution Attorney

When closing your corporation or partnership, you may have business issues that are not yet resolved. You also don't want any liability issues to later arise, making you personally responsible, after the business is officially dissolved. The basic framework involved in dissolving a business is to complete any contracts that are still open but also not commit to any new business. You must conclude collecting all monies owed your business as well as understanding clearly what your assets and liabilities are. You will need to pay off any extant debts. Any revenue left over should be placed in a reserve account. This will help ensure that any other financial matters not yet clarified and/or settled will be taken care of. For example, your business might have a lawsuit pending, and you will need to be able to pay for any upcoming judgment against you.

If there is any tax liability outstanding, you will need to be sure that it is paid prior to making any final payments to the owners. If this is not done, then the owner(s) will be responsible personally to pay the taxes. Likewise, if the business has any outstanding debts to creditors, which are not paid, then you as the owner can be sued. Only after your creditors are paid and any possible unsettled liabilities are provided for in reserve accounts can owners receive any payout.

Sometimes, when you have business partners, or shareholders, your decision to close the business may not be met with full agreement. A skilled business attorney can perform the necessary actions that result in an agreement reached by all parties.

There are instances where the Secretary of State must authorize a business dissolution. This applies to corporations, LLCs, limited partnerships, and limited liability partnerships. It is necessary to file all the appropriate paperwork with the Secretary of State. In these cases, the state does not recognize that a business has been dissolved even if all its creditors have been paid and the owners have received their share of the remaining funds. You will still be required to pay annual taxes and fees until the Secretary of State verifies that you have filed all applicable tax returns and have paid all the taxes owed. If any tax penalties were incurred, proof they were paid must also be submitted. Once satisfied, the California Franchise Tax Board will issue a Clearance Certificate, allowing the Secretary of State to approve a dissolution request.

Dissolving your business can be an emotional and stressful situation. If undertaken incorrectly, such as not fully complying with tax regulations or other procedures, there can be serious legal and financial consequences. Don't let this happen to you. The attorneys at The Law Office of Nikki Farris, understand this as well as what it takes to successfully dissolve your business so you can move ahead with your future plans. We can provide you with an objective viewpoint on your best course of action. Contact a business lawyer in Chico to guide you.

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