Maybe it started with a dream, or just a way to make extra money from your hobby. You created a business plan, gathered your start up money, and opened your business. But now, for one reason or another, the time has come to wind up the business and move in a new direction.
Although it would be easy to just lock the doors and walk away, Pennsylvania law does not allow corporations to just fade away into the night. If your business was incorporated along the way, there are certain things you must do to officially dissolve the corporation. Unless you follow the correct procedures in winding up your business, reporting requirements and other obligations will continue to apply to you and your business.
If you operated your business as a corporation there are two ways your corporation may be dissolved: Voluntarily or involuntarily. A voluntary dissolution is exactly what it sounds like — you’ve decided to no longer operate the corporation, and you are voluntarily dissolving it. An involuntary dissolution may occur when the shareholders are in disagreement about whether the corporation should be dissolved. We’ll discuss Involuntary Dissolution in an upcoming article.
If all shareholders agree to dissolve the corporation, then they must decide under which section of the IRS code the business will be liquidated. Next, the board of directors must put together a plan of liquidation to be approved by a simple majority vote of the shareholders. The business must then provide notice to any existing creditors, the IRS, and each municipality where the business has a registered office or place of business.
Additional requirements for voluntarily winding up a business are filing Articles of Dissolution with the Corporation Bureau of the office of the Secretary of State and an application for Corporate Clearance Certificate with the Pennsylvania Department of Revenue and with the Bureau of Employment Security of the Department of Labor and Industry. Finally, the corporation must provide legal notice of the proposed dissolution by publication in the local county law reporter, the local newspaper, and directly to all known and potential creditors.
If you need assistance dissolving your corporation, or any other matter related to managing your business, the attorneys at the Scolieri Law Group, P.C. can help. Located in western Pennsylvania, our attorneys are experienced in Pennsylvania business law and can take care of the details for you, including dissolving your corporation if needed. Contact us today at (412)765-0546 or firstname.lastname@example.org.