Closing Your Business: What You Need to Do
by
Bethany K. Laurence, J.D. &
Attorney Shannon Miehe
Follow these steps to close your business safely and legally.
So you've decided to close down your business -- maybe you're not making it financially, you don't have the time or will to manage it anymore, or you're moving on to the next "big thing." Whatever your reasons for closing your business, there are a few legal tasks you need to undertake to protect yourself, your credit, and your reputation in the community, especially if you ever want to go into business again. Here are the main steps you'll need to take to shut your business down legally and minimize the risk to your personal assets:
- Vote to close the business
- Dissolve your business with the government
- Cancel permits, licenses, and fictious business names
- Pay your taxes and debts
- Notify your creditors, employees, and customers
Vote to Close the Business
If you have been operating as a sole proprietor, you simply make the decision on your own, or with your spouse, and skip to the next step.
If you have been doing business as a corporation, limited liability company (LLC), or partnership, you and your business associates must agree to dissolve the entity by following either the procedures set out in your organizational documents or the rules set out in your state's business statutes. Usually, these rules require at least a majority of the owners to agree on dissolution, but they could require a two-third's or even unanimous vote. Dig up those documents to make sure you conduct the voting correctly, or check your state's corporation, limited liability company, or partnership statutes to find out what the rules are. You can get to most states' business statutes by clicking here: www.nolo.com/statute/state.cfm.
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