You cannot simply shut the doors on closely held businesses
On behalf of Kadish & Associates Law Group posted in Closely Held Businesses on Friday, April 8, 2016.
Unless a business is a sole proprietorship, it takes more to close a business than many Arizona company owners might realize. Dissolving closely held businesses involves more than just locking the doors and turning off the lights. If the proper procedures are not followed, there could be significant legal and financial ramifications in the future.
The fact is that not every business will succeed and/or be able to keep its doors open. For partnerships, limited liability companies (LLCs) and corporations, a process needs to be followed in order to ensure that owners can walk away without fear of unexpected repercussions. Often, the initial documents that were filed and created in order to start the business include provisions for dissolving it as well. If not, then it will be necessary for all of the owners to agree on a procedure and document it for the protection of everyone involved.
Dissolution documents will need to be filed with the Secretary of State in order for government agencies such as the IRS, state tax officials and others to consider the company defunct. Otherwise, the company will still be liable for these and other obligations despite no longer being active in business. Any licenses the business holds should also be cancelled, and any employees need to be given their final paychecks, which will need to include any unused leave time. Final bills will need to be paid, including tax obligations, and accounts should be closed.
All of these steps will take some time for Arizona owners of closely held businesses to complete. Furthermore, they need to be meticulously documented and tracked for future reference. Due to the complexities of the process and what is as stake, it would be inadvisable to attempt it without the appropriate advice and assistance.
Source: sba.gov, “Steps to Closing a Business”, Accessed on April 5, 2016