Nichole Y. Shafer
Guest Columnist
When business owners decide to close a business, a few things need to be done to legally accomplish this. Specifically, the process of legally ending a corporation’s existence is called corporate dissolution.
Most people know to dissolve a business, they need to get rid of all the property they own. For example, if I owned a furniture business, I would sell all the furniture, I might sell the building I have my furniture business in (if I own the real property). Then I would close the bank account once all the money was dispersed.
But after getting rid of the property owned by the business, some might ask how do you legally dissolve the business. An LLC is simpler to dissolve with the state compared to a corporation. This is because an LLC has fewer steps to dissolve the business.
When taking a deeper look at how to dissolve a corporation, the first step many businesses do is to review their business documents. This is important since business documents oftentimes outline the instructions for a business’s dissolution. If business documents cannot be found or do not outline the dissolution process, then one can look to the statute to fill in the gaps.
To close a corporation, the corporation will need to wrap up any legal and financial obligations such as paying creditors and finishing up any constructional obligations. This is important since the corporation is required to notify creditors of the business’s impending dissolution. Specifically, when submitting the corporate dissolution paperwork with the state, the corporation will have to confirm that creditors and claimants were given notice of the corporation’s dissolution.
Next, the corporation will also need to inform the relevant licensing agencies that the corporation is dissolving. This way, the appropriate agencies can cancel any permits or licenses that the business may have.
Additionally, to be able to dissolve with the state, a corporation must send notice to Ohio Workers’ Compensation letting them know about the dissolution. This is because corporations in Ohio also have a duty to pay into the state’s no-fault workers’ compensation fund. If workers’ comp premiums are not made, the company could be prevented from dissolving.
Corporations must also provide notice to Ohio Job and Family Services. Due to corporations having to pay into the Ohio unemployment compensation fund, state regulators will need to confirm the payments have been made prior to a corporate dissolution.
The corporation will also need to file a final tax return, pay any remaining business taxes and file a notification of dissolution or surrender with the Ohio Department of Taxation. By filing this notice, a corporation gets a tax certificate that is needed to be filed with the state when the dissolution paperwork is filed.
Finally, shareholders should be notified of an impending/proposed dissolution and approve the dissolution (unless the business documents indicate otherwise).
Once all these steps are taken, the corporation can file the dissolution paperwork with the state, and the state can officially classify the business as being closed. If you are in need of dissolving your corporation, please contact your attorney to have them assist you with the process, as there are many notices and filings that need to occur.
Nichole Y. Shafer is an Ohio-licensed attorney at Schroeder Law LTD in Putnam County. She limits her practice to business, real estate, estate planning and agriculture issues in northwest Ohio. She can be reached at [email protected] or at 419-659-2058. This article is not intended to serve as legal advice, and specific advice should be sought from the licensed attorney of your choice based upon the specific facts and circumstances that you face.
