Corporate Dissolution: Why Consulting Experts Is A Must
For many businesses and corporations, there may come a time when due to a variety of reasons, it is time to call it quits. The process of officially liquidating a business and closing up shop is called corporate dissolution. Corporate dissolution is a complicated, multi-step process that requires strict adherence to state laws and Internal Revenue Service (IRS) regulations. For companies that are looking to begin the corporate dissolution process, the following information will help you better understand the necessary steps and reasons why consulting an expert is in your best interest.
What is the purpose of corporate dissolution?
When establishing any business, one must go through the formal process of filing documents with the state of incorporation to register their company as a legal business. A similar procedure must be followed when one wishes to terminate a business, too. Corporate dissolution is a necessary process that withdraws the corporation as a business entity and ensures your business does not remain bound to state filings or other legal obligations. Additionally, if a business is not properly dissolved, it can remain susceptible to lawsuits or incur additional liability. Each state of the union has its own rules and regulations when it comes to corporate dissolution, which can make the process especially complex. Therefore, it is in the best interest of businesses of all sizes to consult an experienced business attorney to ensure proper compliance with state requirements.
“Each state of the union has its own rules and regulations when it comes to corporate dissolution, which can make the process especially complex.”
How to dissolve a corporation
In the state of Florida, there are three ways to dissolve a company. How a business begins its corporate dissolution process will depend on whether the company has issued shares or not. If the corporation has not issued any shares, the directors of the company can decide to dissolve the company by filing Articles of Dissolution. If the company has issued shares, the company may be dissolved by the vote of a majority of the shareholders upon recommendation of the Board of Directors or upon the written consent of the shareholders without any action by the Board of Directors. Finally, while the decision to dissolve a corporation is often voluntary, dissolution can also be state ordered. State-ordered dissolution may occur if the corporation fails to file or pay corporate taxes or does not file required information with the state of incorporation. A dissolved company will then continue its corporate existence only to liquidate its business and affairs.
Articles of Dissolution requirements may vary depending on whether the corporation is public or private. Additionally, the IRS requires all corporations to file IRS Form 966, Corporate Dissolution or Liquidation, within thirty days of initially filing articles of dissolution. Because there is a high degree of variability in corporate dissolution requirements from state to state and even company to company, the U.S. Small Business Administration recommends consulting experts. Rather than trying to understand dissolution law and complete dissolution steps on their own, businesses should seek out an experienced business attorney who can walk companies through the proper procedures. This will help ensure proper compliance and that your company is legally and officially dissolved.
Call South Florida Law
Are you business looking to dissolve your company in the near future? Make sure you follow proper state protocols to ensure your company is officially and legally dissolved. Are you feeling unsure about how to begin the process? Take proactive measures and contact an experienced corporate dissolution attorney at South Florida Law. Reach out to South Florida Law at (945) 900-8885 or via our contact form.