Did you know that there are over 2 million businesses in Florida? A lot of these businesses are thriving, while others need to dissolve due to issues with business partners or profit margin issues. No matter the reason for business dissolution, it is imperative that you work with a business law attorney who can ensure you dissolve according to the business law in Florida.
If you need to dissolve your business and want to know how to do so, please continue reading below. We will cover pertinent information you must know about dissolving according to Florida business law and who you can call for additional guidance.
What Is Dissolution in Business Law?
In business law, dissolution is when you voluntarily or involuntarily end your business operations. Some companies dissolve their business because they failed to turn a profit, and there are legal issues or problems between the partners involved in the industry.
Other reasons why a business may choose dissolution:
- Shareholders wish to shut down the business
- Court edict
If you need to dissolve your business, it is imperative that you dissolve it according to business law. If you don’t, there is a chance you could run into legal issues with taxes or unpaid debts.
Steps to Business Dissolution
It is important to note that unless you have a sole proprietorship, you must get approval of the owners of the corporatoin or LLC to file for dissolution in Florida.
A corporation or LLC cannot be dissolved without the consent of the owners. In corporations, the decision must be approved by the shareholders. Members of limited liability companies (LLCs) give their consent.
Shareholders or members of small enterprises are frequently active in daily operations and frequently are aware of the situation. The dissolution procedure and necessary approvals are normally outlined in the bylaws of a company or the operating agreement of an LLC.
The board of directors should write and approve the resolution to dissolve in order to follow corporate requirements. The director-approved resolution is subsequently put to the vote by the shareholders. Both actions ought to be noted down and entered into the company record book.
Even though LLCs are exempt from these formalities, it is nonetheless advisable to record the choice and member approval.
Step One: File the Certificate of Dissolution
Documents must be submitted to the state where the corporation or LLC was created once shareholders or members have decided to dissolve the company. Paperwork must also be filed in those states if the corporation was authorized to conduct business there.
Each state has a different procedure for submitting the Certificate of Dissolution (also known as the Articles of Dissolution). In the state of Florida, you must file your articles of dissolution in accordance with the Florida Revised Uniform Limited Partnership Act of 2005 if you are a partnership.
If your business is an LLC, your articles of dissolution must be in accordance with the Florida Revised Limited Liability Company Act. Those who have their business filed as a corporation must follow the Florida Business Corporations Act.
It is best to contact your business attorney to guide you through the process and any tax implications that may be involved.
Step Two: Notify Tax Agencies
After you figure out what business law in Florida you must file for dissolution, you then need to notify tax agencies about the dissolution. This includes alerting the IRS (Internal Revenue Service), Florida Department of Revenue, and any other local or state tax entities that your business may owe taxes to.
Florida business law when it comes to taxes can be quite complicated. Although the IRS does provide business owners with a guide about how to dissolve your business, it is best to speak with a business attorney to learn more about your options.
Step Three: Notify Any Affected Parties for Debts
It is very important that you notify your creditors and any other related affected parties about your company shutting down. This includes reaching out to insurance companies and any lender who provided you with a business loan.
Additional parties you may need to reach out to:
- Service providers
When you let all of these important parts of your business know about your company shutting down, it helps you avoid any legal issues. For example, if you shut down your business and fail to tell your vendor, they may deliver supplies to you on the promise you will pay them. If you just shut down and don’t pay the vendor for the promised service, they could sue you.
Make sure you also tell any lender about you dissolving your business. Depending on the terms of your contract, they may ask for you to pay the remaining balance on any loan you have upfront. If you don’t speak with the lender and you let the loans default, it could damage your credit and the lender may come after you to recoup what they lent you.
Step Four: Divide Assets and Liabilities
Once you let all the important business partnerships know about you dissolving your business, you must then look over your remaining assets and liabilities.
Dividing your assets and liabilities amongst business partners is a complicated process than can quickly turn sour. Even if the decision to dissolve the business is mutual, there is a chance that one business partner may not completely agree with how to divide assets or liabilities.
To help ensure that the division of all liabilities and assets goes smoothly, it is best to partner with a reputable business attorney to help you. Your lawyer can help resolve any conflicts and they can look at all the paperwork to determine the best way to divide liabilities and assets.
Should I Hire a Business Law Attorney?
If this is your first time dissolving a business, it is best to consult an attorney for further guidance. Even if it isn’t your first time, speaking with a lawyer about dissolving your business is key.
When you work with an attorney who has an extensive background in business law in Florida, they will make sure to look over all the laws that apply to your situation. The attorney will also make sure you file the correct documents needed to ensure your dissolution is legal. If there are any important stakeholders you owe money to, the lawyer will also make sure they are taken care of.
Business Law Help in Dissolving a Business
Dissolving your business is something that you should not do on your own. There are several different business laws you must follow to ensure you properly dissolve your business to ensure you don’t fall victim to any legal issues.
Working with a reputable business law attorney is essential in making sure the dissolution goes smoothly. The last thing you need is a lawsuit against you for any debts you owe.
If you are ready to dissolve your business and you need the help of a knowledgeable attorney, contact us. Our team is here to answer any questions or concerns you have about dissolving your business the correct way.