Heselmeyer Zinda, PLLC knows what’s involved in matters of corporate dissolution.
Dissolving a corporation is not as easy as it sounds. In nearly every business, there comes a time when, the life of a company should come to a close. Dissolving a business relationship is often a more arduous task than the initial start-up.
When it comes time to dissolve your corporation, someone will have to tie up any loose ends and fulfill the final legal obligations of the company. But how is this accomplished? “The process behind dissolving a company is dependent upon the business structure. Special handling is required especially with the involvement of shareholders,” states D. Scott Heselmeyer of Heselmeyer Zinda, PLLC.
Just because all of your merchandise is gone and you have closed your doors for the final time, do not assume that your company is finished. From a legal viewpoint, the company still exists even if you are no longer conducting business. Until an official dissolution is completed, the state requires the corporation to continue to fulfill its legal obligations.
“Not dissolving your corporation can have severe consequences,” says Heselmeyer, “the costs typically do not outweigh the consequences of failing to legally dissolve your company.”
Besides not having corporate closure, some consequences that you may be forced to deal with are tax filings and the associated penalties and fees of late filing, personal liability, annual reports, future product liability from any product sold while the company was in operation and asset allocation delay. The latter is likely to directly affect the shareholders, who would not be legally entitled to their share of the company’s assets until an official dissolution has been made.
When you first decide to dissolve a company, you need to adopt a corporate resolution to dissolve, an action designated by the board of directors. A vote has to be taken with minutes of the meeting recorded and retained in corporate records. Once this has been approved by the board of directors, a majority approval amongst the shareholders must be reached. Once these details have been met, an Article of Dissolution will need to be filed with the Secretary of State of your particular state; sometimes this can be accomplished with a certificate, but may require a more complicated process.