Owning a business is a great way to make a living, but not every business succeeds. If you are an owner of an incorporated business that has failed, then dissolving that business is sometimes the only reasonable option. Dissolving a legal entity, such as corporation, is more complicated than simply locking up the facilities and going home. Here are some to the most crucial steps to keep in mind when terminating a corporate enterprise.
Accounts and Inventory
One of the first critical steps in the dissolution process is collecting as much of the accounts receivable as possible from the corporation's customers and clients. Take this action before you announce that the company is ending its business activities. If you wait until after the announcement, your debtors may have less incentive to hand over the cash. Also, try to sell as much of your excess inventory, if you have any, as quickly as possible. Reduce the asking price for your goods if necessary.
Debts and Bills
Just as you collected outstanding payments from your customers, you need to pay any outstanding bills and debts to your creditors. If your business is strapped for cash and unable to pay all of its debts in full, negotiate with your creditors. Many times a lender is willing to accept less that full payment in these situations. Creditors often want to avoid the expense of trying to collect a debt through the court system.
Renting and Contracts
If your company rents its facilities month to month, contact the landlord and give him notice of your intention to vacate the premises. If you have a long-term lease, try to negotiate a settlement. Like creditors, landlords will sometimes take less than they are legally owed in order to avoid expensive court actions. It can never hurt to ask. If you have other outstanding contractual obligations, fulfill those that you can and seek to settle the more problematic ones as advantageously as possible.
Because dissolving a corporation is a legal process, as well as a business decision, you must file dissolution papers with your state. In some states, the company might not be able to file if it owes any taxes, so determine the relevant requirements in your region.
The various complexities involved in dissolving a corporate enterprise make it essential to obtain excellent legal advice before proceeding. For example, some parts of the process call for negotiating skills, where the experience of a professional can be the difference between a successful outcome or failure. Contact a lawyer experienced in corporate law in your area for more information about this topic.Share