So, you’re asking how to dissolve a business? Well, I’m sure you know the answer, that is “It depends.” How to dissolve a business is dependent on many factors including what , if any, business entity you have, what kind of business you are running, whether there is debt involved, your reasons for dissolving your business, etc. All of these pieces must fit together into an orchestrated event to determine how to dissolve a business. Let’s take a look at each of these factors:
Business Entity
When determining how to dissolve a business you will want to take into consideration what kind of entity you are running your business through. For some, it may be that you are operating as a sole proprietor or a general partnership. Generally, if you are operating as a sole proprietor or general partnership you can dissolve a business without jumping through as many hoops. However, if you have formed a limited liability company or a corporation in order to run your business, then you will have a few more formalities that you will need to undertake which may include, filing your final tax returns, having the appropriate meetings, filing the correct documentation with the secretary of state, etc.
Type of Business
If you are running a one store brick and mortar business, the considerations when determining how to dissolve a business will be different that if you are running an online enterprise or a chain of retail outlets or a distribution center. In each of these cases you should review any contracts you have in place and find out what your potential liabilities are there, you may or may not have a lease obligation, equipment that needs to be disposed of whether it’s a lease return or selling it, what to do with any inventory, etc. All of these considerations will hinge on what type of business run.
Business Debt
Unless your business has a solid credit history, and even if it does, you may have business debt. This debt could be small or can be considerable, and the amount of debt may hinge on the type of business you are running. When determining how to dissolve a business any debt should be taken into consideration because chances are unless your business has a track record, and even if it does have a great credit history, you may have some debt lurking out there that you have personally guaranteed. in some cases, that makes a difference and in some it does not, it will depend on what business entity you operate your business through as well as some other factors that are fact dependent.
Reason for Dissolving Business
Let’s face it, there are as many reasons for dissolving a business as there are people who run businesses. But, the high level view of the reasons are usually one of a very few choices, like couldn’t make it profitable, wanting to retire, found an interest more dear to your heart, etc. When determining how to dissolve a business, you will want to consider the reasons and your goals because that can help guide your decision on how best to dispose of it. You may want to consider just closing the doors and throwing away the key, selling it, gifting it, or any of a multitude of other ways, but the decision should be keyed into your reasons.
When is the best time to determine how to dissolve a business? The best time to think about how to dissolve a business is when you are forming your business. Why? You might ask. It’s because if you think through what you would like to do with your business you have a better chance of being successful in your business endeavor and you have a goal, plan and/or timeline within which to get out of your business. Of course, it’s never too late to plan your way out.
If you are needing help with how to dissolve a business, Integrated General Counsel can help you determine your next steps. If you are ready for a results-driven plan of action, contact us either by telephone at (925) 399-1529, schedule yourself into our calendar for an appointment at a time convenient for you, or complete the Contact Kristen form and we will get back to you.
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