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Closing time: Dissolving your business

If your business has remained afloat for two years, you are keeping company with 70 percent of entrepreneurs in Florida and across the country. About half of all businesses make it to the five-year anniversary. Nevertheless, an anniversary is just a number, and if your company has serious problems, you may be considering closing up shop.

There is an important difference between ceasing operations and dissolving your company. If you dissolve your company, you will notify your state and federal governments that you are no longer in business. This will mean your company will no longer be responsible for taxes, accumulating debts and committing to other obligations beyond the end of the year. Dissolving your company may be a difficult and emotional decision, and there are a variety of reasons why a business owner may decide to take that final step.

Common reasons to dissolve your business

The simplest reason for dissolving a company may be that the business isn't making enough money to sustain itself when the economic climate changes. If your company subsists on loans and credit, you may decide the frustration and uncertainty is not worth it. Additionally, if you are considering filing for debt relief through bankruptcy, dissolving your company may be part of the process.

Additionally, financial issues may result from poor money management. If you or your accountant were unable to keep accurate records of payments and expenses, the disarray of your business's finances may have gotten the best of you. However, mismanagement may be more basic than handling money. Running a business requires skills in many areas, including:

  • Production
  • Purchasing
  • Sales
  • Hiring
  • Training
  • Management of staff

If you tried to handle these factors on your own, you may have soon realized that you were able to give your full attention to some elements of your business while you neglected others.

Stepping forward with confidence

Perhaps the most disheartening reasons to dissolve a business include your relationships with people. If you and a partner reached an impasse over crucial business decisions, you may have determined that the future of the business looked bleak. Perhaps you simply want to retire, but you can't find anyone in your company or family whom you trust to take over the business, or some employees are already squabbling over who should succeed you.

Whatever the reason that is causing you to consider dissolving your business, you likely have many questions about the legal requirements and ramifications of closing up shop. Consulting an attorney will provide you with solid counsel and options to consider. An attorney who has experience and a background in many aspects of business law can ensure that the dissolution will be handled as smoothly as possible.

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