FAQs about closing or dissolving a business
Unless you are the sole owner of the entity in question, the dissolution of the business usually requires the consent of the other owners. The dissolution procedure should be defined in the Bylaws of a Corporation or in the Operating Agreement of a Limited Liability Company. While formal dissolution requirements vary between the two types of business entities, both will need to meticulously document the decision to dissolve the business, and the subsequent approvals by the required parties. Once these formalities are complete, you will need to file the Certificate and/or Articles of Dissolution with the appropriate state authorities so they officially recognize the dissolution.
Every business is unique and different, but here is a general overview of the types of financial obligations that may need to be resolved before the business dissolution is complete. The first step is to file the appropriate tax forms, settling the company's federal, state, and local tax obligations. After paying any taxes that are owed, it will be necessary to satisfy the claims of creditors. This is usually done by notifying creditors of the (intended) termination of the LLC or Corporation, and outlining a deadline for submitting claims. Once the claims of creditors are resolved, you can proceed to liquidate the remaining assets of the business, distributing the proceeds according to the percentage of the dissolving corporation or company owned by each owner. This step completes the dissolution process.