It’s hard to let go of a dream. But when that dream becomes a money pit, it’s no longer a dream: It’s a nightmare. How can you close it and let it go “gently into that good night?” (with apologies to Dylan Thomas)
The short and obvious answer is: It depends. It depends on when you started your business and whether you’ve filed all necessary tax returns. It depends on whether there are creditors waiting to get paid. It depends whether you’re a corporation or an LLC.
Assuming there are no creditors and all taxes have been paid, dissolving the company is usually a matter of filing a few forms with the secretary of state of your state and confirming with the state taxing authorities that no taxes are owed (it’s a slightly simpler process if you’re an LLC because your profits and losses would already have shown up on Schedule C of your tax return).
Don’t expect to avoid having to account for your taxes if you didn’t make any money. Chances are, you earned something, so you’ll have to make a note of that. But if your business expenses exceeded your business income, it may end up being a wash. Speak to your accountant and your attorney about the best way to handle the situation.
NOTE: Make sure to have that conversation before the end of the year–some states charge companies an annual “franchise” tax (a nominal tax for the privilege of doing business in the state), and the tax is levied as of the beginning of the year. A little pre-planning to ensure good timing can save you money.
This entry was posted on Tuesday, October 28th, 2008 at 10:12 am and is filed under Business Planning, Horror Stories, Miscellaneous. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.Leave a Reply
