by Deborah Sweeney | Featured Contributor
Whether things didn’t work out with your last venture, or you’re just moving on to something new, sometimes businesses close. Unfortunately, a lot of small business owners don’t know that there’s a process beyond simply closing your doors and putting a sign on the door. If you fail to officially dissolve your business with the state when the time come, you could end up paying unnecessary taxes, annual state fees, late fees, and additional charges. To avoid all that, follow these four steps:
- File Articles of Dissolution
When a business terminates, it needs to file articles of dissolution (also known as a certificate of dissolution or a certificate of cancellation) to make the close official. If you do not file your articles of dissolution, your business will go on being an active entity in the Secretary of State’s eyes. That means that, legally, your business will need to continue filing its annual reports, paying state fees, and paying taxes, even if you are technically closed. You have the option of doing the paperwork yourself, but many small business owners opt for the use of a filing service to help ensure all the paperwork gets done correctly. If you do choose to file the articles yourself, just be sure to do your research- one incorrect paper could add up to some hefty charges.
- Don’t Forget About the Annual Tax Return
Though filing your articles of dissolution will stop you from having to pay any future taxes, you still need to file an annual tax return for your last year of doing business. Even if you didn’t do business for almost the entire duration of the year, you still have to pay for the time you were in business. When filing your final tax return, check the ‘final tax return’ box to notify the state that this is your last one. This goes for your employment tax return as well.
- Tell the Necessary People That You’ve Closed
Is your business registered with the state? Contact the state and let them know you’ve dissolved your business. All of the insurance providers associated with your business? Let them know the same. Anyone who has previously worked for or with your business needs to know that you will no longer be there. More than just the people who provided your business a service, like the state and your insurance broker, your partners need to be notified as well. Just a small note or an email letting them know that you’ve enjoyed working with them, but you will no longer be conducting business, is the courteous thing to do.
- Try and Make Some Money
Lastly, regain some of the money you may be losing by selling what you can of your business. Everything from office necessities like the break room refrigerator to supplies and company machinery. Just be sure to report all your business assets. Take stock of what you have, and make the most of it.
Deborah Sweeney – Legal Expert, CEO, MyCorporation.com – Calabasas, CA
As CEO of MyCorporation Business Services, Inc. (MyCorporation.com), Deborah Sweeney is an advocate for protecting personal and business assets for business owners and entrepreneurs. With her experience in the fields of corporate and intellectual property law, Deborah has evolved from lawyer to business owner. She has extensive experience in the start-up and entrepreneurial industry as she has been involved in the formation of hundreds of thousands of businesses for MyCorporation.com’s customers.
Ms. Sweeney received her JD & MBA degrees from Pepperdine University. She is active in the community and loves working with students and aspiring entrepreneurs. She serves on the Board of Regents at California Lutheran University and is a founding member of Partners of Pepperdine. Deborah has served as an adjunct professor at the University of West Los Angeles and San Fernando School of Law in the areas of corporate and intellectual property law. Ms. Sweeney is also well-recognized for her written work online as a contributing writer with top business and entrepreneurial blogging sites. She is a regular contributor on Forbes, American Express, Social Media Today, and BlogHer among many others.
In her ‘free’ time, Deborah enjoys spending time with her husband and two sons, Benjamin (8) and Christopher (6). Deborah believes in the importance of family and credits the entrepreneurial business model for giving her the flexibility to enjoy both a career and motherhood. Follow her on Twitter @deborahsweeney and @mycorporation.