Question: Unfortunately, I wasn’t able to make my startup work. How do I formally close my business?
Answer: This depends on what type of business entity you have. Before dissolution begins, the business’s owner(s) have to agree to close up shop. This is pretty easy for a sole-proprietorship, but partnerships, corporations and LLCs will normally have to vote and agree on dissolution. The latter three entities also need to document their final decision in writing. Corporations and LLCs have to file Articles of Dissolution with the state they were formed in and, if necessary, Articles of Withdrawal or Termination in states where they qualified as a foreign entity. Corporations must also file Form 966 with the IRS within 30 days of dissolution. Finally, when the business is dissolved, the first people that need to be paid back are its creditors. If, after all of the debts are paid, any assets remain they are normally distributed based on shareholder or ownership percentages.
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Are you looking to open a small business? Here are a few more helpful articles from Deborah Sweeney to get you started: