Steps to Close Your Business: Understanding Dissolution and Termination

The process of closing a firm can be difficult and include a number of legal and financial factors. It is critical to comprehend the differences between dissolution and termination as well as the stages involved in each process whether you are closing your firm freely or involuntarily. In this post, we’ll go over the procedures you must follow to close your business and respond to some of the most typical queries about doing so. Dissolution as opposed to termination

Although they have different definitions, the legal phrases dissolution and termination are sometimes used synonymously. Dissolution and termination both refer to the process of winding down a firm, whereas dissolution refers to its complete discontinuance. In other words, termination is the last step in the process of terminating a business, whereas dissolution is the process of ending a business’s legal existence. How to Close Your Business in Six Easy Steps 1. Call a board meeting: If your company is a corporation, the board must convene in order to approve a resolution to dissolve the company. The company’s minutes must include a note about this resolution.

2. Submit Articles of Dissolution to the State: After the board has decided to dissolve the company, you must submit Articles of Dissolution to the state. Depending on the state in which your firm is located, a specific procedure may apply. Generally, in order to file the Articles of Dissolution, you must complete a form and pay a fee.

3. Notify Customers and Creditors: You must inform all of your clients and creditors that your company is closing. You can do this by giving them a formal notification or by getting in touch with them directly. Additionally, you should plan to settle any unpaid obligations and end any open accounts.

You must file a final tax return with the IRS and check the box that says the LLC is being terminated if your company is an LLC. Additionally, Form 966, Corporate Dissolution or Liquidation, must be submitted to the IRS.

After the board has decided to dissolve the company, articles of dissolution should be filed as quickly as feasible. This is crucial because following the filing of the Articles of Dissolution, the company will no longer be held responsible for any future obligations or liabilities.

The process of shutting down a firm can be complicated, but if you understand the distinction between dissolution and termination and take the steps listed above, you can make sure that everything goes smoothly and legally. To make sure that all legal and financial requirements are completed, it is crucial to contact with a legal and financial professional.