Whether you are moving on to other ventures or simply shutting down a business that is no longer profitable, the decision to close a business is always a difficult one. Once you have decided to do so however, it is important that you follow all legal requirements to make sure you properly close your business.
Many business owners in Pennsylvania find the sales and dissolutions process challenging. The steps you must take will depend on the business structure you chose for your business, as well as the location of the business.
Sole proprietorship
As the only owner of the business, shutting down a sole proprietorship is fairly straightforward. You will need to notify governmental agencies of the closure and file one last Schedule C to notify the IRS of the closure. You will also need to notify your insurers to pay off any remaining premiums or get a refund on your premium, if necessary. Finally, you will need to notify your creditors, customers, and anyone you do business with of the closure of your business. Pay off any remaining debts and post a notice on your website to make sure everyone is aware of the closing.
Domestic LLCs
Dissolving a domestic LLC in Pennsylvania is a little more complicated than dissolving a sole proprietorship, as it is a state-registered business entity. First, you will need to obtain your Tax Clearance Certificates. In order to obtain these Tax Clearance Certificates, you will need to fill out an application with the Department of Revenue and Department of Labor and Industry.
Once you have obtained clearance, you can proceed with the dissolution process. First, refer to your LLC operating agreement to determine the procedures for dissolution for the company. You may have to hold a vote with other LLC members to get approval for the dissolution, distribute assets, and pay off debts.
Finally, you will need to fill out a certificate of dissolution and file it with the Department of State.
Dissolving a business, no matter what the structure, is complicated and something that no business owner should take lightly. A business law attorney specializing in these matters can help you with every step of the process and ensure that your business