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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 after dissolution for any lingering issues.
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 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.
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.
Dissolution is often a hectic time for a business and can lead to mistakes in the distribution of compensation among the owners. To prevent any liability after dissolution related to compensation, it is important to get it right. Speaking with a business lawyer can get you on the right footing to make sure distributions happen according to the agreements in place.
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) 352-0847 or contact us online.