Sometimes businesses just don’t work. Sometimes they merge with another business. Sometime partners choose to retire. The truth is, businesses close for a variety of reasons. It is not enough, however, for a business to just shut its doors and walk away, never to be heard from again. Instead, a business must be legally dissolved. Failure to formally dissolve a business can result in expensive penalties and personal liability for judgments against the business. It is always best to consult a highly regarded business attorney as soon as dissolution is even considered.
When a business is dissolved, several things will happen. The business’s assets and property must be sold, and any debts must be paid with the available assets. Any money remaining after debts have been paid will be distributed to the business’s shareholders, partners, or members.
Florida’s requirements for dissolution will vary slightly depending on the type of business entity.
- Corporations – In order to dissolve a corporation, a majority of the shareholders must agree to the dissolution (unless the corporation has not issued any shares; in this instance, dissolution may be initiated by the directors or incorporators). Articles of Dissolution should also be filed with the Department of State’s Division of Corporations. After dissolution, the corporations will continue in existence for the sole purpose of “winding up” the business, which includes collecting assets and paying debts, and making distributions to shareholders from any remaining property.
- Limited Liability Companies (LLCs) – To dissolve an LLC, the rules for dissolution will typically be found in the articles of organization. Most likely, those rules will require the LLC members to vote on a resolution to dissolve. Alternatively, dissolution of the LLC may be initiated by unanimous written consent of all LLC members. As with a corporate dissolution, Articles of Dissolution will also be filed with the state.
- Partnerships – Unlike LLCs and corporations, partnerships do not require a formal written agreement to be legally recognized as a partnership. Similarly, a formal, written agreement of dissolution is not required either. The partnership can dissolve if all partners decide to do so. A partnership may also be dissolved once the purpose for which it was formed has been accomplished.
Regardless of which type of business entity is being dissolved, all must consider:
- Notification of all creditors of dissolution
- Settling any creditor claims
- Final tax returns
- Division of assets and assignment of liabilities
- Potential for litigation when dissolution is contested
It is important that a business facing dissolution works with an attorney who can provide the support needed to deal with issues that may arise, regardless of the type of business entity.
The Law Firm of Peter Feaman, P.A. can help with the dissolution of your business from start to finish, whether it is a corporation, partnership, or limited liability company (LLC). Our experienced attorneys have the knowledge to guarantee a thorough dissolution that leaves no further obligations or liabilities for your business. Contact one of our attorneys today at 561-734-5552 to arrange a free initial consultation.