Dissolution of a Corporation
If you want to dissolve the corporation, there are some considerations. You need to understand what dissolution means and the types. A corporation takes time to form and before the board decides to dissolve it, all necessary measures should be undertaken to save the business.
If such efforts fail, then perhaps it’s time to dissolve the corporation.
Types of Dissolution of a Corporation
Nothing is permanent in this world, only change. Businesses come and go. Some business owners succeed while others fail. During the economic slump, a lot of businesses closed out. The companies were not able to withstand the competition and the hard economic times. Today, it’s typical for the Secretary of State to receive dissolutions. Before you go any further, you need to understand what dissolution means and the types. A corporation takes time to form and before the board decides to dissolve it, all necessary measures should be undertaken to save the business. If such efforts fail, then perhaps it’s time to dissolve the corporation.
Dissolution of corporation simply means the termination of the corporation. It can be of two types – voluntary and suspension. Voluntary is very easy to understand. When the corporation can no longer operate the business, dissolution is an alternative. Once the board has decided, the corporation will now file the dissolution documents with the Secretary of State. All assets will be distributed once the debts have been paid. This is the ideal situation for the corporation because the other type is not very good. With voluntary dissolution, you won’t have a negative record in your state since you will also pay off your debts.
Suspension and the Consequences
The other type is state suspension. This is not a very good situation to be in because the suspension is triggered by non-payment of taxes. At times, the government can also take action and the result can be suspension and eventually the dissolution of the corporation. Paying taxes is very important and if you’re always delinquent with the payments, the IRS will definitely go after you. Having problems with this agency is not very good because you are sure to face legal problems in the future. No amount of reasoning will work if you don’t pay your taxes.
If you can still work out a plan of action with regards to the unpaid taxes, then go ahead and negotiate with the IRS. However, if all measures fail, it will only lead to one thing- suspension of the corporation or dissolution. When a corporation has too many debts, the assets will be liquidated upon the dissolution. All debts will need to be settled and the remaining (if there is still money left) will be distributed to the owners. Dissolution is a serious decision and this should be the last option of the corporation. Find other measures to improve the business before you give up the corporation.
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