Like getting married or purchasing a home, starting a business is an exciting time of new beginnings and high enthusiasm. Just as no one wants to enter a marriage thinking of divorce, or buy a home thinking of foreclosure, no one wants to start a business on the premise that it may eventually collapse into dissolution.
Unlike a marriage or mortgage, however, a business entity is essentially immortal without human intervention: if a venture is not formally terminated, the abandoned husk will carry on for years, increasingly vulnerable over time to creditors and lawsuits. Dissolving a business can ensure peace of mind, and give former partners and shareholders the confidence of knowing their entity is safely and securely laid to rest.
Steps to Dissolving a Business
Dissolving a business in Pennsylvania is a multi-step process. Initially, you’ll need to bring it to a vote. If your business is a one-man band, it’s as simple as you making the decision for yourself. However, if more than one owner is involved, as in the case of a partnership, you’re obliged to come to a decision as per the rules laid out in your company’s documentation. Some businesses require a majority vote for dissolution; others are more stringent, requiring complete unanimity.
Once the owners are in agreement that dissolution is appropriate, the next step is to inform the government, both at the state and Federal level, that the entity is closing. If Uncle Sam thinks you’re still operating normally, he will continue to expect your business to pay its taxes. At the state level, the Pennsylvania Department of State offers the dissolution forms you will need to submit on their official website.
Additionally, in Pennsylvania, businesses are required to secure a tax clearance certificate from the Pennsylvania Department of Revenue, as well as the Pennsylvania Department of Labor and Industry. This tax clearance shows that all of the taxes your business owes have been paid, and all of your tax forms have been filed properly. Once you obtain a tax clearance certificate, it must be presented to the Department of State, along with the appropriate dissolution forms discussed above. A tax attorney can help with this.
Informing the government of the business dissolution is also critical in terms of ensuring creditors will no longer pursue the entity for any debts incurred. This is especially important if your entity is a general partnership, because partnership structure dictates that the individual partners are personally liable for debts. In the worst case scenario, that means that a partner’s car, home, or possessions can be up for grabs.
Finally, you’ll need to cancel any trademarks, names, logos, and licenses associated with your business. While this might seem excessive, it will provide that you don’t see your old logo being used by another business in five years’ time. It will also ensure that old taxes and uninformed clients won’t be back to mistakenly haunt you.
Business dissolution takes some effort. Our knowledgeable business dissolution attorneys can guide you through the process and make sure you’ve crossed your t’s and dotted your i’s. Contact Berkowitz Klein today to see what our 30 years of experience can do for you.