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Closing Your Corporation
It may be that you need to close your corporation for some reason later on down the road. It could be because of a variety of reasons such as financial problems, market changes, or the fact that it simply conflicts with what you want to be doing in life. Although the decision can be difficult to make, it may be warranted. Closing your corporation is difficult but not impossible if you follow the right steps. An attorney may be helpful in this situation, if you can afford one.
The steps you take should ensure that your own personal liability remains minimal. You want to make sure you can protect your credit, your assets, and most of all the respect and your reputation in the community in case you do want to go into business again. To dissolve your corporation you must first have the agreement of all of your associates or board of directors. The secretary must officially record the decision to close your corporation in the minute’s book. Some states do require a unanimous vote, whereas others just go by a two-thirds vote so you need to find out what your state requires.
You will then be required to file forms that are called “articles of dissolution”. They tell the whole picture of the corporation’s closure and they cover everything that is important to your business such as the company’s debts, assets, and liabilities. They also record the actual reasons for closure and how the shareholders voted. Some states require that you receive a tax clearance or consent for dissolution before you officially dissolve your business. This just declares that all of your business taxes have been paid.
If you have people that still owe you money, you should try to collect on these before you officially dissolve your corporation. After you close it, there is no actual reason for them to pay you since you’ll soon be out of business, and many debtors will try to avoid paying if they even know you are going out of business. You are also requested to pay certain debts before you let anyone know of your situation as well. This should include payroll tax deposits and outstanding debts to the government. The IRS will hold you personally responsible if you don’t file your final employment tax paperwork on time, so make sure you have the cash on hand to do so even if there is bankruptcy involved in closing your corporation. You want to pay others off as well such as your business banks, and your landlord. Closing all business accounts and canceling business credit cards is extremely important in the case of dissolve of your corporation.
Finally, do not just close your business and leave without a forwarding address or phone number. There may be instances down the road where you will need to be accessible. You want to update your address and phone number as it chances so that you can be reached in case past employees, shareholders, or the government needs to contact you. Also, make sure you keep any paperwork on the dissolution of your corporation close at hand no matter how long ago you dissolved your corporation.