People have many reasons to close a business. You might want to close because you’re ready to retire, or facing possible bankruptcy, or you’re just ready to start something new. Whatever reason you have to close your business, there are normally steps you have to follow to do it right. If you don’t dissolve your business correctly, you could open yourself and your associates up to unnecessary debts, penalties, and negative personal consequences. If you want to let your business go, make sure you take the steps to truly end it.
If you’re not ready to dissolve your business, this article can still give you tips on how to build a strong business. And if you’re still trying to get a limited liability company (LLC) off the ground, we can help with that, too. You can jump over to our Pennsylvania LLC Formation Service and Corporate Formation Service pages for business formation assistance.
Important steps that can ensure the smooth closure of a business are planning for closure from the beginning and keeping good records. In many cases, you must be able to declare to the commonwealth that a specific amount of your business owners agreed to end your business before you can dissolve it.
Having records of resolutions and votes can keep you out of trouble if an owner who voted against closing your business tries to challenge you. Having detailed records of finances, contracts, and business obligations can also help you quickly resolve outstanding matters before you shut your doors. Do your work on the front end so you don’t have a lot of mess to clean up when you’re ready to put your business behind you.
Probably the biggest question you will have when you dissolve a Pennsylvania business is, What do we do with the money and assets? This is where a solid valuation of your business is crucial. When you determine the value of your business, you want to take everything into account. You want to account for your inventory, your assets, your real estate, your debts, money owed to you, etc. Gathering all your business documents, including contracts and tax information is also crucial at this stage. The more business documents you have to review and analyze to determine the value of your business, the better.
Don’t worry if you don’t know how to analyze your business documents to determine the value of your business. A great option is to hire a professional to value your business. Even if you can value the business on your own, a professional might be able to find money that you’re leaving on the table. When settling business matters before closure, every penny counts.
Having your business documents organized and ready to review is a boon when you’re running or ending a business. With our Worry-Free Compliance Service and ZenBusiness dashboard, you can easily keep track of your business documents, so they’re easy to access when you need to make big business decisions.
Knowing all your business debts is paramount. Many individuals who want to dissolve a Pennsylvania business have to make a statement to the Pennsylvania Department of State that they have discharged all business liabilities or made provisions to handle them.
Regardless of whether you have to make a statement, creditors can still come knocking after your business closes. Business debts don’t always go away after a business closes. If a creditor can’t sue your business for its debts, they might be able to sue you personally. This is called “piercing the corporate veil.” This might happen if you and your business are so intertwined that you should be personally liable for business matters. Piercing the corporate veil can happen regardless of whether you were running a business entity that normally limits personal liability.
There are many events that can dissolve a business in Pennsylvania, but here, we’re talking about voluntary dissolution. To voluntarily dissolve a Pennsylvania LLC or corporation, there’s certain paperwork you need to file with the Department of State. To voluntarily dissolve a Pennsylvania LLC, you file a Certificate of Dissolution. To voluntarily dissolve a Pennsylvania corporation, you file Articles of Dissolution.
Once you’re ready to file your Certificate or Articles of Dissolution in Pennsylvania, you can file your document online or by mail.
Depending on the kind of business you run, you can make many of your own rules for how to dissolve a business in Pennsylvania. You can write these rules in an operating document such as a corporation’s bylaws or an LLC’s operating agreement. These are documents business owners agree on to dictate how to run and regulate their business. If you have an operating document for your business, you follow the business dissolution rules in that document. But even if you write your own business rules, you still need to file dissolution paperwork with the commonwealth.
Without an operating document, your business operations must follow Pennsylvania laws that might not serve your business purposes well. If you want to write your own business operation rules for your LLC and you need guidance, our Operating Agreement Template gives you a great foundation for shaping your business rules to your ideals.
No matter what kind of business you run, there’s a good chance you have licenses, permits, or registrations to operate. These permits, licenses, and registrations could be at the local, commonwealth, and/or federal levels. Before you close your business, you want to make sure that you’ve cancelled these authorizations from the government. You also need to check if these authorizations have automatic renewal features that could continue to charge you fees long after your business is gone.
As stated before, dissolved or dissolving businesses need to discharge their liabilities or make provisions to handle them. You might have to contact several parties and government agencies to complete this task. Common actions to take when you close your business include paying your employees, filing final tax returns (commonwealth and federal), and cancelling your Employer Identification Number with the IRS. You can check the IRS website for more information about how to close federal tax accounts and keep your closing business compliant with federal obligations.
Filling your Articles of Dissolution or Certificate of Dissolution is the beginning of the end for your business. Don’t be surprised if you still have to handle some business matters after you file your dissolution documents. Handling these matters can be part of the “winding up” process. It’s also important to keep paperwork from your dissolved business for a reasonable period of time. By keeping your business papers, you can have appropriate information ready if someone makes a claim about your business obligations.
As you can see, closing a business can take as much thought, action, and organization as opening a business. But you don’t need to feel overwhelmed with your obligations when you’re ready to walk away. We have the tools to help you prepare for a smooth business dissolution. Our Worry-Free Compliance service and ZenBusiness dashboard can help you keep your business in good standing with the commonwealth and organized while you make plans to enter a new chapter.
Disclaimer: The content on this page is for information purposes only, and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.
In many cases, you must have a vote from enough of your owners before you can dissolve. Then you discharge (or make provisions for discharging) your liabilities, distribute assets, and file dissolution paperwork with the commonwealth. This process normally includes a filing fee.
Filing a Certificate of Dissolution form to dissolve your LLC requires you to pay a filing fee that you can find on the form’s instructions.
It can take the Pennsylvania Department of State 15 business days to process business filings.
To dissolve a nonprofit corporation, you must have a vote from enough owners. Then you discharge your liabilities (or make provisions for discharging your liabilities), distribute assets, and file Articles of Dissolution with the Department of State. This process normally includes a filing fee.
Pennsylvania Business Resources
Business Dissolution by State