If you are a Houston-area business owner seeking to dissolve your business, you may have wondered whether you need the assistance of a lawyer to do so. Given that most businesses are subject to both state and federal regulations, it is important that you follow the advice of a lawyer when winding down a business, to minimize any potential liability. The Weisblatt Law Firm, LLC, regularly assists business owners in dissolving businesses efficiently and with an eye to avoiding regulators or other interested parties from coming back to the owners for any issues lingering after dissolution.
Get the help you need for the peace of mind you deserve. Call Weisblatt Law Firm, LLC at (713) 666-1981 to speak with an attorney about your business dissolution plans today.
Canceling State and Federal Registrations
If you have incorporated as a corporation or a limited liability company (LLC), you have filed your articles of organization with the state of Texas. You also have an ongoing duty to file annual reports with the state. If you fail to do so, you may be penalized. That is why it is important to follow the necessary steps to notify the state that the business is closing.
You provide such notice by filing a form called the Certificate of Termination of a Domestic Entity. This alerts the Texas government that your entity is dissolved and is no longer liable for filing taxes and annual reports. Likewise, the IRS has guidelines for alerting it of the dissolution of your business, which includes the filing of a Report of Corporate Dissolution or Liquidation (IRS Form 966). It is highly recommended that you complete both forms with the help of an experienced business lawyer.
Canceling Business Licenses
On top of canceling your registrations, you will also need to terminate any licenses and permits acquired during the course of your business. Failing to properly cancel licenses and permits can lead to continued obligations on the part of your business, which can lead to significant fines and liabilities if those obligations aren’t carried out. For example, a failure to cancel a license or permit could result in automatic renewal and future unintended duties.
An attorney can take a comprehensive inventory of all permits and licenses your business has acquired and ensure that they are terminated properly.
Weisblatt Law Firm, LLC has worked with Houston-area businesses for decades and can serve you, too.
Seeking Valuation of Business Property and Assets
The value of all business assets and property must be obtained before the business can be dissolved. Often, partners and owners dispute the value of certain assets, which can lead to extended business dissolution times. Complicating matters are intangible assets, such as intellectual property and goodwill. Business dissolution attorneys are crucial at this stage to head off conflicts that can delay the dissolution of the business.
An attorney knows which method or methods of valuation to use for each individual case. Depending on the circumstances and nature of the business and its assets, one type of valuation may be more suitable than others. Common types of valuation used include an income-based approach, an approach based on the market and market value, and an asset-based approach.
Selling Business Assets
Selling business assets can help pay for outstanding debts and liabilities. They become liquid assets, which can then be easily distributed to shareholders. Businesses must take great care when selling assets to prevent high expenditures on sales fees, costs, and expenses.
For example, an asset worth $10,000 might ultimately bring in only $8,000 after the payment of seller’s fees and other costs. To avoid high collateral and direct costs of selling, businesses should develop a meticulously prepared plan to deal with assets systematically and at a low cost.
Business attorneys are familiar with various methods of lowering the costs of liquidation. They also know the tax and business law provisions that govern business dissolution sales and can protect their clients from unexpected liabilities.
Paying Debts and Compensating Owners
Under your operating agreement or shareholder agreement, you will have obligations to pay business owners after the payment of all incurred debts. To the extent possible, the business should pay all valid debts of the business to avoid any further liability among the owners of the business. If there are any proceeds available thereafter, the management should distribute the proceeds according to the operating agreement or shareholder agreement.
Common debts and financial obligations owed by a Texas business might include:
- Local, state, and federal taxes
- Outstanding B2B debt
- Unpaid payroll
- Unpaid independent contractors
- Business credit debt.
Dissolution is often a hectic time for a business and can lead to mistakes in the distribution of compensation among the owners. Speaking with a business lawyer can help ensure that distributions happen according to the agreements in place.
Resolving Loose Ends
There are always loose ends to tie up during business dissolution. In most cases, these loose ends should be addressed or they can lead to serious legal issues later on down the line, long after the business has been dissolved.
Experienced business attorneys excel in spotting potential problems that might creep up after a business dissolution. They meticulously review all aspects of the business they represent and can effectively predict damaging issues that may spring up. Their experience allows them to take preemptive measures to avoid or settle lingering and future problems.
Considering Future Business Ventures
If your business is dissolving, it may be that you are transitioning into another business venture immediately or in the near future. If so, your business dissolution lawyer is in an advantageous position to guide and counsel your next moves. After taking time to fully understand your new business goals, your lawyer can get to work on protecting your venture through meticulously prepared and drafted contracts, leases, and other crucial documents and paperwork.
Call a Houston Business Attorney at The Weisblatt Law Firm, LLC, Today to Dissolve Your Business
If you are dissolving your business, it is important to speak with a business lawyer to make sure you are doing it in a way that will not lead to further liability after dissolution. There are many opportunities for error that can lead to contentious lawsuits or state and federal penalties. This is often avoidable by having the right legal counsel review your business entity and following the right steps to dissolve your business.
If you are seeking to dissolve your business, do not hesitate to call the Weisblatt Law Firm, LLC, today at (713) 666-1981 or contact us online.
Attorney Andrew Weisblatt
Mr. Weisblatt has practiced continuously since becoming licensed in 1992 and has represented businesses ranging in size from one person start-up ventures to multi-national corporations employing hundreds of people in multiple countries. From 2005 through 2009 Mr. Weisblatt was in-house counsel and chief operating officer of a multi-national corporation in the steel products industry. That in-house position provided valuable insight into how businesses work and what they actually need from their lawyers – both in-house and outside counsel. Attorney Bio
