With starting a new business comes optimism and hope. Dissolving a business, though, might or might not be a positive affair.
It’s true that formally closing a business, in some cases, may just mean it’s time to move on to something else. Sometimes, though, a business has no other option but to end operations when it fails to turn a profit, the partners butt heads, or there are legal issues that make it impossible for the business to continue as is.
Some companies are shut down by their creditors, others by their shareholders, and some by a court edict.
The actual process for dissolving a business in Florida is somewhat more involved than just locking up and going home.
5 Steps for Dissolving Your Florida Business
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Determine the method of dissolution
The first step is to decide what type of dissolution your business qualifies for. If it’s not issued shares yet and you’re yet to do business, the procedure is simpler. Otherwise, you’ll need the majority of the shareholder’s consent.
To do this, call a meeting of the shareholders. The board of directors must put the issue of dissolution up for a vote and recommend a course of action.
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Filing with the state
Unless you are a sole proprietor, your first step is to file dissolution papers with the state. You’ll need to file your articles of dissolution under the state’s established guidelines.
For instance, corporations must file in accordance with the Florida Business Corporations Act, whereas partnerships are required to file papers under the Florida Revised Uniform Limited Partnership Act of 2005. If your business is an LLC, you’ll need to dissolve according to the Florida Revised Limited Company Act.
You’ll also need to delve into canceling any permits or licenses your business might have from local, state or federal agencies.
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Telling the tax agencies
When you dissolve a business in Florida, it’s likely that the business will have a few outstanding tax liabilities. It’s important that all your tax issues are correctly handled.
Firstly, you’ll need to let the IRS, along with the Florida Department of Revenue, and any other local or state tax agencies you may owe money to know that you’re shutting your doors.
Tax issues are often a complex state of affairs. The IRS does provide a general guideline for the dissolution of businesses, but it’s best to work with a knowledgeable attorney.
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Settling debts and getting the word out
It doesn’t matter what type of business you have, you still have a legal obligation to notify your creditors and any other parties that your business is being dissolved. Take the necessary steps to reach out to your lenders, suppliers, insurance companies, vendors, and any other necessary service providers.
This is all part of winding up your business. If you don’t take the right measures when you’re dissolving a company, you risk facing a lawsuit from any of the abovementioned parties. A lawsuit, of course, is the last thing you want to deal with after closing your business down.
Once you’ve spread the word to the relevant parties, you can expect to receive notifications regarding any outstanding claims. Along with your business partners, you should carefully inspect the claims to determine if they are valid. If you do decide to reject a claim, be it from a supplier or a creditor, make sure you consult with an attorney right away to ensure you are acting within the law.
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Divvying up liabilities and assets
The last step involved in dissolving a business in Florida is to sell off any of the business’s remaining assets and conduct distributions to the stakeholders.
Often, this part of the process can be complex. Even if you voluntarily dissolve the business, serious disputes may arise between stakeholders. They may not agree on how to use or distribute the remaining assets. If you have an issue with making final contributions, an experienced attorney can help.
When a shareholder dispute arises, it is important to seek legal assistance as early as you can. It’s the best way to ensure your rights and interests aren’t overlooked.
Contact Us Today
At Principal Law Firm, our experienced team can help with the legally correct and complex issues of dissolving a business in Florida. Book an appointment today to discuss the best way forward for your business.
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