From three offices located in San Jose, Morgan Hill and Fremont, the business dissolution lawyers at The Law Offices of Steven E. Springer aid existing businesses, corporations, partnerships and other companies with dissolving their entities, from the initial windup of business to final termination. Dissolution can be voluntary — meaning that the owners make the decision to end the company — or involuntary, such as by bankruptcy or court order. Following dissolution procedures properly is extremely important, as failure to do so may subject the owners or members to personal liability for business debts or judgments against the company.
What is Involved in Dissolution?
If you decide to end the life of your business, typically the first item to address will be to ensure that any existing obligations are completed, while not taking on any new obligations. The business should then pay off any existing debt and/or tax liabilities and create a reserve for future known liabilities (such as an existing lawsuit against the company) when possible. It is very important that debts and taxes be paid and that a reserve be created before paying money to members, partners or shareholders, as they will become personally liable for the debts and taxes otherwise, whether to the state of California or to private debt holders. Once the taxes are paid, the debts cleared and any reserve created, the owners then receive payment, first to their respective capital accounts and then the remainder of any profits.