Updated: Nov 30, 2022
Here's A Quick Guide To Business Dissolutions As Advice By Our Employment Lawyers for Businesses in Long Beach.
The formal process of ending your business' existence as a state-registered business entity and putting it out of reach of creditors and other claimants is known as business dissolution.
Here's a quick guide on Business Dissolution in California, as often handled by Long Beach Business Law Attorneys.
Businesses can be dissolved involuntarily by a court order or voluntarily by the proprietors. A vote of the shareholders can also dissolve corporations, the partners can dissolve partnerships, and a vote of the LLC members can dissolve LLCs.
California's Corporate Dissolution Requirements
To voluntarily dissolve your firm, you must follow certain legal procedures. Depending on the sort of corporation being dissolved, the criteria may vary.
Corporations may voluntarily wind up and dissolve under California Corporate Code 1900 if at least 50% of the outstanding shares vote to do so.
Alternatively, a corporation may dissolve with the board of directors' approval if any of the following conditions are met:
The company has filed for Chapter 7 bankruptcy.
The company has issued no shares.
For at least five years before the resolution's passage electing to dissolve the corporation, the corporation had sold all of its assets and had not conducted any business.
If the following conditions apply, the majority of directors or, if no directors have been chosen, the incorporator can choose to dissolve the corporation if the following applies:
The company has been around for less than a year.
Except for certain tax liabilities that will be accounted for, the corporation has no debts or liabilities.
The company hasn't done anything yet.
Assets, obligations, and known liabilities have all been accounted for.
A final franchise tax return has been filed or will be filed shortly.
Filing final tax returns, issuing adequate notice to shareholders, and filing a Certificate of Dissolution and, depending on the circumstances, a Certificate of Election To Wind Up And Dissolve with the California Secretary of State are all required administrative actions.
Consult an experienced Business Law Attorney in Long Beach to ensure that you follow all regulatory and administrative standards to properly wind up your firm and avoid unnecessary responsibility.
What Legal Issues Do You Face When Your Company Is Dissolved?
A business's dissolution might result in a slew of legal complications. We will assist you with your business dissolution and any connected matters at Rounds & Sutter, including:
Disputes in partnerships
Creditors take actions
Conflicts between corporate shareholders
Property and asset ownership disputes
Allegations of contract breach
Investor disagreements about profit and asset distribution
Obligations related to debt
That said, some situations are more complicated than others, so for any concerns that might be affecting your plans to dissolve your business, contact a prescreened Long Beach Business Lawyer to help you out.
Filing Papers And Paying Tax
Government scrutiny is unavoidable for commercial entities, and closing your business entity in the eyes of the state is an important component of ending your presence in California.
The termination of a business in California is referred to by several titles depending on the type of firm. Domestic corporations, or businesses founded in California, can be "dissolved."
Foreign corporations, or those formed outside of California, can "surrender," thus ending their legal existence in the state. When limited liability organizations (LLCs) or partnerships in California come to an end, they can legally "cancel."
Filing the necessary documents with the Secretary of State is an important part of ending your business with the California government. On the other hand, paying down all leftover tax bills is even more critical.
While paying and negotiating with all types of creditors is important to closing a business, unpaid taxes deserve special attention. For one thing, even if your company was organized as a corporation or in another way that safeguards owners from accountability, tax debt may be one area where creditors might obtain personal assets.
In addition, unlike most other types of debt, many tax obligations are not dischargeable through bankruptcy.
That said, for any concerns about your business, it's best to contact a Long Beach Business Ligitation LawyerLitigation to help you sort out the legal aspects.
Find Employment Lawyers for Businesses in Long Beach, California
Need someone to manage the paperwork and legal requirements for your business in California?
You can contact us through our 24/7 Live Chat (or complete our submission form) for a FREE INITIAL CASE REVIEW.