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Sometimes, despite meticulous strategies, our business plans don’t come to fruition, and we have to accept that the start-up we have worked so hard to establish is just not succeeding the way we hoped it would.
If, unfortunately, you find yourself in this position, here are nine things you should consider before closing your company:
Review your LLC Operating Agreement or corporation bylaws; both should specifically state how your Delaware company should be closed, including how to handle outstanding debts, how to liquidate assets and how to notify the appropriate parties involved.
Speak with your accountant to see if your company needs to file federal and/or state tax returns for one final time.
Contact the IRS in order to terminate your company’s EIN (Federal Tax ID Number).
Evaluate all unresolved contracts, loans and obligations your LLC or corporation may owe.
Meet with your bank representative in order to close your business bank accounts.
File a Certificate of Cancellation (for an LLC) or a Certificate of Dissolution (corporation) with the Delaware Secretary of State. Your Registered Agent can assist with this filing.
Consider closing the company before the end of the calendar year to avoid additional Franchise Tax Fees imposed by the state.
If your LLC or corporation filed for Foreign Qualification in another state, then typically a Certificate of Withdrawal will need to be filed with that state.
Remember that once a company is officially closed, it can be expensive to re-activate it, if it is even feasible to do so. Also, keep in mind that your original company name may no longer be available.
It is also wise to consult with an attorney to review your company’s specific details, as this list is not comprehensive and every business situation is different.
THE AUTHOR OF THIS BLOG ARTICLE IS NOT A LAWYER AND HARVARD BUSINESS SERVICES, INC. IS NOT A LAW FIRM. THE ARTICLE ABOVE IS NOT INTENDED AS LEGAL ADVICE AND SHOULD NOT BE TAKEN AS LEGAL ADVICE. THIS SHORT ARTICLE IS STRICTLY TO MENTION SOME ASPECTS OF DELAWARE’S CORPORATION LAWS AND/OR LAWS RELATING TO OTHER FORMS OF ENTITIES WHICH YOU MAY NOT BE FAMILIAR WITH. WE RECOMMEND THAT YOU CONSULT WITH A LAWYER BEFORE FORMULATING A STRATEGY WHICH WILL BE SUITABLE FOR YOUR SPECIFIC CASE.