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Top 5 Mistakes Business Owners Make When Dissolving Their LLC

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Business closes due to various factors such as bankruptcy, retirement from the owner, and disagreement between members. Irrespective of the reason, it’s important to ensure you follow the right procedure to dissolve your LLC in New York. Additionally, you need to use the right procedure when forming your LLC to avoid complications such as future liabilities by the business owners. Business owners make many mistakes when dissolving their businesses, which leads to more disputes and penalties from the state.

It’s important to learn more about how to close a business to avoid making mistakes that could cost you during dissolution. You must file the right paperwork and inform the respective credentials and state agencies. This article will explore the mistakes business owners make when dissolving their LLCs.

1.   Failure To Follow The Voting Procedure

Voting is the key rule to deciding whether the members agree to dissolve the LLC. During the dissolution of business, you can follow the LLC operating agreement that lets you create rules on dissolving the LLC and the procedure to be used during Voting. If you lack this, you will be subject to the state’s LLC statute that provides guidelines on the procedure to be used during the dissolution of the company. If you plan to dissolve your company, you must follow either procedure to reach an agreement. Most business owners will tend to overrule the procedure set, which can lead to delays in the dissolution process.

2.   Failure To File State, Federal, And Local Tax Forms

When dissolving, most business owners fail to fill the tax forms with the state agencies. This will lead to accumulated taxes which will be expensive, and your business can be sued. It’s important to consult with an expert since filling out the certificate of dissolution differs by state. Additionally, some states will require you to have a tax clearance certificate before your fill for startup shutdown. You will not be able to dissolve your company if you don’t file for the taxes with the state’s agencies and clear all pending amounts.

3.   Failure To Cancel All LLC Licenses And Permits

Dissolving the LLC requires a lot of paperwork and procedures that should be followed. Without officially filing for dissolution, the state will assume you are still operational, and you must file the annual reports and pay taxes and other additional fees.

Contacting Goodbye Startup can help you file for the dissolution, and they can get advice on the procedure according to your state. Inquire how to cancel licenses and permits to avoid accumulating penalties and extra charges. In some states, you can transfer your LLC licenses and permits to the business entity.

4.   Failure To Notify Creditors 

One great mistake business owners can do is fail to notify their creditors that the company is ending. This can lead to increased interest and penalties. You should notify creditors and solve any claim presented as it is a requirement by the state.

5.   Not Filling The Articles Of Dissolution

You don’t want your company to charge extra fees after dissolution. That is why you need to file articles of dissolution or equivalent documents to notify the state that your business no longer exists. Most states will offer the forms online, but you will have to pay some fee for filing.

Conclusion

It’s important to follow the right procedures when filing for dissolutions. This will ensure the process is faster, and you will avoid paying extra penalties.

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