If you and your business partners agree to dissolve your business, there are several steps that are recommended:
1) Consult Your Organizational Documents
If your business is a partnership with a written Partnership Agreement, an LLC, or a corporation, you will need to follow the required steps upon dissolution (such as voting requirements) contained in your organizational docs. These documents may consist of Partnership Agreements (Partnerships), Articles of Incorporation (Corporations) or Articles of Organization (LLCs), depending on the type of company you are dissolving.
2) Notice of Intent to Dissolve and Articles of Dissolution
Each state has its own laws which address the procedures for dissolution. For example, in Georgia, corporations that have not issued shares or have not commenced business may dissolve by filing their Articles of Dissolution. However, a corporation that has issued shares and commenced business may dissolve by first filing a Notice of Intent to Dissolve, and publishing the notice of dissolution in a newspaper of general circulation in the county where your corporation’s registered office is located. After publication, these Corporations may file their Articles of Dissolution with the Secretary of State.
Georgia LLCs may dissolve by submitting a Letter of Termination to the Secretary of State’s office. A certificate of termination must include the following: name of the LLC; all known debts, liabilities, and obligations of the LLC have been paid or discharged; and that there are no actions pending against the LLC in any court or that adequate steps have been taken for the satisfaction of any judgment that may be entered against it in any pending action.
3) “Winding Up”
Winding up is the process of taking inventory of all business assets, notifying creditors and collecting all monies owed to the business, discharging liabilities and distributing the remaining property to stakeholders. Regardless of the type of business entity, businesses have an obligation to inform creditors of an impending closing. You will need to inform lenders, insurers, suppliers, vendors, and service providers to terminate those contracts and determine how much you owe them upon dissolution. After you’ve settled up with your creditors, what is left of the business assets must be distributed as provided in the business’s organizational documents.
4) Notify Tax and License Authorities
In addition to reporting to local, state, and federal tax agencies, you will need to file additional paperwork with your local agencies to terminate any business licenses and permits. Consult a knowledgeable attorney, such as Sparks Law attorneys, or contact the tax agency or licensing agency and inquire about what steps are required upon dissolution.
5) Terminate or Withdraw Foreign Registrations
If your company has a foreign registration with another state, you must notify that state of the dissolution. Depending on the state, the form may be called a termination of registration, certificate of termination of existence, application of withdrawal, or certificate of surrender of right to transact business.
If you have any questions on how to dissolve your business, please call an attorney at Sparks Law. We are happy to help!