You need to vote for dissolution and file the correct form in your state.The first step in winding up your business is dissolution.You need to make a full inventory of your property and plan to sell it.You need to repay debts after the property has been sold.If you need help with the dissolution process, contact your lawyer and accountant.
Step 1: Go ahead and vote to break up.
You can find the procedures for dissolving the corporation by reading your by-laws.The Board of Directors or shareholders need to approve the dissolution.You will need to read your state's statute if your governing documents are silent about the dissolution process.You can find it at a law library or online.You can type your state and corporate dissolution into your browser.Remember to record the vote.You need to record the vote in your meeting minutes.
Step 2: You should get the dissolution form.
To find the proper dissolution form, you should contact your state's Secretary of State or Corporations Division.You have to file this form with your state.These are often available for download.The form might have different names.
Step 3: Write a cover letter.
Send a cover letter with the completed form to the state.The Secretary of State or Corporation's Division is responsible for dissolving the corporation.The date the dissolution vote was held and the extent to which you intend to liquidate the corporation should be included in the cover letter.
Step 4: The form needs to be completed.
Each state has a form that asks for slightly different information.You must give the following information: your corporate name, how dissolution was authorized, and any canceled shares.
Step 5: The dissolution form needs to be submitted.
You should keep a copy for your records.If you want to know when it has been received, send the form certified mail and return receipt.The address should be on the form.The agency you contacted to get the form is the one that is in charge of dissolving the corporation.It is possible that you will have to pay a fee.The fee should be stated on the form.
Step 6: The Internal Revenue Service needs to be notified.
If you are a corporation, you have to notify the IRS of the dissolution.Form 966 is needed to file Corporate Dissolution or Liquidation.The IRS form can be found at www.irs.gov.You should keep a copy of your own records.All paperwork related to the dissolution should be kept for at least seven years.
Step 7: You need a tax clearance.
It is possible that your state's taxing authority will need to approve the dissolution before it becomes effective.Your state's requirement will depend on it.The approval can be called a tax clearance, consent to dissolution, or verification of good standing.Contact your state's Secretary of State to find out how to get this clearance.You have to make a request in writing or over the phone.You have to be current on your taxes in order to get this approval.You should meet with your accountant to figure out how to catch up if you are not current.When states require this clearance, your corporation will not be dissolved until you have filed and paid taxes.
Step 8: Don't register, licenses, and permits.
In order to legally run the business, your corporation might have had multiple permits or licenses.The appropriate procedures to cancel them should be followed.Cancel your business license is additional information.
Step 9: Notify the creditor.
You should tell your corporation's creditor when you are dissolving.The creditor knows that it should not give more credit to the corporation.The creditor must contact you about your debts before you die.You can send a letter to everyone.Make sure to mention the deadline in the letter if you owe them money.You can state that the corporation will be dissolved on the date.The amount of the claim, the basis, and the origination date must be included in the written claim.There is a deadline to submit the claims.The claim will not be recognized if it is not received by the deadline.
Step 10: Inform debtors.
Everyone who owes the corporation money needs to be contacted and told to pay before the dissolution.Send a letter with a deadline and a person to contact if they have questions.It is possible for your letter to state, "Debtors are requested to pay all outstanding balances no later than 30 days from the date of receiving this notice."Payment should be made to the person designated to receive it.
Step 11: Tell your clients and suppliers.
All entities that have done business with you need to be aware that you are dissolving.You can either call or send a letter.If you haven't yet delivered the goods, you should either deliver them or return the payment.You could also publish a notice in the newspaper.You can state in your ad why you're closing and thank your customers for patronizing you.
Step 12: You should review your contracts.
You should go through your contracts to see what's left to be done.You can either fulfill your obligations or talk to the other party.There is a cancellation fee for long-term contracts.You can pay this sum of money to cancel the contract.
Step 13: Don't forget to collect outstanding debts.
They should be paying their debts.Keep track of which debts have been paid and which ones you need to follow up on.In order to get a debtor to pay, you may need to threaten a lawsuit.You should speak to your lawyer.
Step 14: Cancel your lease.
You will need to cancel the lease if the corporation leased property.Take your copy of the lease agreement with you.The lease agreement should contain this information.If you have a month-to-month lease, you must give 30 days' notice.If you had a long-term lease with a landlord, you will have to pay rent on the rest of the lease.It is possible to get out of a long-term lease.A landlord has a legal obligation to look for a new tenant.You can help the landlord find a new tenant by advertising or by speaking to competitors who might be interested in moving into the space.
Step 15: Define corporate property.
You need to sell the corporation's property when you die.You will use the cash generated to pay off the debts of the corporation.You should make a list of all corporate property, including business equipment, such as phones, computers, and other machines, as well as real estate and any security deposit made to a landlord, if you can get them refunds.
Step 16: Property should be set aside as a security.
If you secured a corporate loan with a piece of real estate or other property, you can't sell it without the creditor's permission.If you can pay off the debt, you will be able to sell the collateral.You need to speak to the creditor if you can't afford to pay off the debt.The creditor should decide if it wants the property or not and then give the proceeds to you.
Step 17: Look for buyers.
The property can be sold to anyone you want.You might want to approach competitors in the field first.They might be interested in your intangible property.You can advertise on eBay or in the newspaper.You should be realistic about the value you receive.You won't get more than 80% of the value for the property you sell.The best you can do is maximize the value.
Step 18: Hire a professional.
There are businesses that will sell your business.You can find a business broker on the Internet or in your Yellow Pages.
Step 19: Pay off debts.
All corporate debts must be paid off after the corporation has been dissolved.Your accountant can help you pay your debts.You can use the cash from the sale of the corporate property to pay off the debt secured by the property.You can sell the collateral after paying the debt.Prioritize your debts.You can pay your debts by guaranteeing them.If you owe any wages or benefits to employees, you should pay them in the order in which they are due.
Step 20: Pay your employees.
If the company has employees, you need to inform them of the dissolution.Employees who have a contract guaranteeing employment for a certain amount of time will need to be bought out.All employees must be paid for time worked.Employees should be paid on their last day.You may need a financial employee in the corporation to help with this.A small bonus can be given to this person to work for the corporation until the winding up is complete.
Step 21: Continue to distribute remaining assets.
If you have paid all of the corporation's debts, then you must distribute the remaining money to the shareholders.Remaining assets are divided by the number of shares held by each shareholder.$100,000 can be left after debts have been paid.There could be 100 shares in the company.The shareholder would get $1,000 for each share.
Step 22: Inquire with your attorney.
At times, your corporation used a lawyer.You may have consulted with a lawyer to review employment contracts or to represent you when a corporation is sued.Contact your lawyer if you have questions about dissolution or winding up the business.If you have difficulty getting out of a lease, or if you need to negotiate with a creditor who has some corporate property as a security for a loan, you might want to meet with your lawyer.You might be concerned about unknown creditor showing up and making a claim on the corporation's assets.If you have this concern, you need to meet with a lawyer.
Step 23: You should meet with your accountant.
During the dissolution process, you should have an accountant by your side.The accountant will help you keep track of upcoming debt repayments.All necessary taxes can be filed by your accountant.Even though the corporation is dissolving, it still has to pay payroll and employment taxes on employee salaries and file a final tax form with your state.
Step 24: Contact the Secretary of State.
You should call the state department if you have questions about the dissolution process.This could be the Secretary of State or Department of Corporations.