BUSINESS DISSOLUTION

Business dissolution refers to the process of terminating a business entity’s existence, such as a corporation, partnership, or limited liability company (LLC). Dissolution can occur voluntarily or involuntarily, and it involves winding up the business’s affairs, distributing its assets, and terminating its legal existence.

Voluntary dissolution occurs when the owners or shareholders of a business entity decide to dissolve the business. This may occur for a variety of reasons, such as retirement, a change in career goals, or a desire to start a new business venture. The owners must follow the procedures outlined in the entity’s governing documents and state law to dissolve the business properly.

Involuntary dissolution occurs when the government or a court orders the business to dissolve. This can happen for a variety of reasons, such as failure to pay taxes, violating laws or regulations, or failing to comply with the entity’s governing documents.

In most instances, dissolution occurs when two or more shareholders disagree regarding how to run the business. See below.

The dissolution process typically involves the following steps:

1. Filing the necessary paperwork with the state where the business was formed or registered.
2. Settling any outstanding debts or obligations, including paying taxes and distributing any remaining assets to the business’s owners or shareholders.
3. Filing a final tax return for the business entity.
4. Canceling any licenses or permits the business held.
5. Notifying creditors, customers, and other stakeholders of the business’s dissolution.
6. Closing the business’s bank accounts and other financial accounts.

Business dissolution can be a complex and time-consuming process, and it is essential to follow all legal requirements and guidelines to ensure a smooth and proper dissolution.

If shareholders disagree on the dissolution of a partnership, the process can become complicated and challenging. In this situation, the best course of action is typically to try to resolve the disagreement through negotiation or mediation.

If negotiation or mediation is unsuccessful, the next step may be to consult with an attorney who specializes in business law. The attorney can help the parties understand their legal rights and obligations, and can work to find a solution that is satisfactory to all parties involved.

If the parties still cannot reach an agreement, one or more shareholders may file a lawsuit to force a dissolution of the partnership. The legal process can be lengthy and expensive, and the court may ultimately decide to dissolve the partnership or order a buyout of one or more shareholders.

In some cases, the partnership agreement may contain provisions that outline how disagreements over dissolution should be resolved. If this is the case, the parties should follow the procedures outlined in the agreement.

It is essential to seek legal guidance throughout the dissolution process to ensure that all legal requirements are met and that the parties’ rights are protected.

Please call the Los Angeles Attorneys at The Darvish Firm, APC to discuss your options and for a no-obligation 15 minute consultation.