Dissolution of a Corporation
Dissolution of a Corporation or Corporate Dissolution
- Dissolution is the procedure, established by state
laws, which you must follow in order to legally terminate your
corporation's existence. You can not just shut down your business
operations and forget about it. Until you have formally dissolved your
corporation it will continue to incur annual minimum franchise tax liabilities
which can be substantial in states like California.
For example, suppose that your company was incorporated in California and now you want to formally dissolve it. After obtaining written clearance from the California Franchise Tax Board that your company owes no outstanding franchise taxes, you must file certain dissolution documents with the Secretary of State's Office. Your dissolution documents must comply with the explicit requirements stated in the California Corporations Code. Special tax laws govern aspects of the dissolution such as priority of payments to employees and other creditors, business expenses, inventory losses and gains and disposition of remaining inventory, so it is important that you get advice from a tax professional. See Liquidation and Winding-Up Process.
Disclaimer: The foregoing is intended to provide general information and may not be suitable in specific instances. The glossary information is not intended to be exhaustive, but rather to illustrate typical considerations. The material is provided with the understanding that it is not legal, accounting, tax or any other professional advice.
Copyright © 2003-2010 LawVantage.com, LLC. All rights reserved.
Important LawVantage.com, LLC and its website, CorporateBoardMinutes.com, do not render any legal, accounting or other consulting advice.
For legal advice, you should always consult with a qualified attorney-at-law.
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For example, suppose that your company was incorporated in California and now you want to formally dissolve it. After obtaining written clearance from the California Franchise Tax Board that your company owes no outstanding franchise taxes, you must file certain dissolution documents with the Secretary of State's Office. Your dissolution documents must comply with the explicit requirements stated in the California Corporations Code. Special tax laws govern aspects of the dissolution such as priority of payments to employees and other creditors, business expenses, inventory losses and gains and disposition of remaining inventory, so it is important that you get advice from a tax professional. See Liquidation and Winding-Up Process.
Disclaimer: The foregoing is intended to provide general information and may not be suitable in specific instances. The glossary information is not intended to be exhaustive, but rather to illustrate typical considerations. The material is provided with the understanding that it is not legal, accounting, tax or any other professional advice.
Copyright © 2003-2010 LawVantage.com, LLC. All rights reserved.
Important LawVantage.com, LLC and its website, CorporateBoardMinutes.com, do not render any legal, accounting or other consulting advice.
For legal advice, you should always consult with a qualified attorney-at-law.
Website development by
Vine Design.