When you are operating a business, there may come a time when you wish to close up shop. The process for doing this can vary depending upon how your business is organized. In some situations, you can simply cease the operation of your business. In other cases, however, the process is much more complicated.
An experienced Scottsdale Arizona business lawyer at Lotzar Law Firm, P.C. can help you to understand how to terminate a Business Entity and can guide you through the process of dissolving your organization. Call today to schedule a consultation and learn more about how our lawyers will help you.
If you are operating your business as a Sole Proprietorship, you can simply discontinue the work you were performing or the services that you were providing and your business entity will effectively be terminated. If you owe debts to any outstanding creditors, you’ll need to pay those debts back or the creditors can come after you personally. You will also need to pay any final wages to employees in order to avoid wage and hour violations.
How to Terminate a Business Entity
If you are operating your business as a Partnership, you must go through a formal process of dissolving the organization. The Partnership may be dissolved upon the death of a partner, unless those who are left expressly agree to continue the partnership. The Partnership can also terminate upon agreement of those involved. The Partnership will continue for tax purposes until one of two things happen: either no part of the business or financial operations is carried out by their partner or there are sales or exchanges of at least 50 percent of the interest in profits and capital over a 12-month period of time.
When a Partnership terminates, a winding up process must occur. This may involve one or more of the partners buying the interests of the other partners, in which case the enterprise becomes a Sole Proprietorship and continues operating. During the winding up process, the Partnership typically needs to be liquidated, property needs to be applied to repay partnership debt, and an accounting of the financial situation of the enterprise must be made. Each partner has an equal right to property and assets, and the winding up process will involve distributing remaining funds and property. An attorney should generally assist with this process.
Finally, winding up a corporation is even more complex than the process of winding up a partnership. Dissolution forms must be filed with the state, all outstanding taxes and debts must be paid, and you will need to notify creditors of their right to make claims. Owners must agree to close the business and all permits, licenses and fictitious business names must be cancelled. Customers should be notified, and property and assets of the corporation that are left after debts are paid will need to be divided among the owners.
Lotzar Law Firm, P.C. has experience helping clients to close all types of business organizations. If you wish to terminate a business entity, call today to schedule a consultation with an experienced Scottsdale Arizona business lawyer who can help you.
- How Often Do I Have to Re-Certify a Tax Credit Tenant’s Household Income? - November 12, 2015
- Property Tax Abatement vs. Property Tax Exemptions – GPLET - November 12, 2015
- Can You Restructure Your Business Under the Arizona Entity Restructuring Act? - November 5, 2015
