Businesses close for many reasons, but it is not enough for corporations or LLCs to simply shut their doors. If you have gone out of business, you need to officially dissolve your corporation or LLC with the State.
You need to take care of several important steps to limit your liability for lawsuits and government fees. Several months after you send notice to your creditors that you are going out of business, and after you have settled debts with all known creditors, it is time to officially end your corporation or limited liability company (LLC). Until the Secretary of State’s office is aware that your company is no longer in operation, you are still liable for annual report filings, Franchise Tax payments and other obligations.
Officially dissolving your business also puts creditors on notice that your business can no longer incur business debts. In fact, in some states, if you do not notify your creditors and customers by officially dissolving your business, they can sue you for a longer period of time.
It is critical that you formally dissolve your company, because letting it lapse or allowing the State to dissolve it involuntarily could create a number of problems, including:
- Personal liability for judgments against the business
- Expensive state-assessed penalties and fees
- Unnecessary registered agent service payments
- The best way to put a stop to these obligations is to file Articles of Dissolution with the State. By doing so, you will end your company’s existence in your state of incorporation and as well as any other states where you are qualified to do business. Formal dissolution also gives you the chance to tie up other loose ends, such as ending your obligation to maintain a registered agent service.
These are only the first steps to closing your business. There are many other practical steps, and they can affect your personal liability if not done properly: notifying your creditors, selling off inventory and equipment, liquidating the rest of your business assets, and negotiating the settlement of your business debts.
JV LAW GROUP, LLP can help you dissolve your business the right way.
If you have any questions and need assistance regarding the dissolution process, please do not hesitate to contact JV LAW GROUP.
