The Headache-Free Way to Dissolve Your Construction Company

By Jennifer Friedman

All good things must come to an end. However, if you wish to close your construction business, it is imperative to dissolve your company properly. By taking the following steps to dissolve your business, you limit your liability for lawsuits and regulatory fees, in addition to ending your obligations to pay annual fees and business taxes. Also, many of these steps will apply if you merely wish to withdraw from one or more states while remaining in business in others.

File a Certificate of Dissolution with the State

If you are a sole proprietorship, it is relatively easy to conclude your business by simply notifying the proper government authorities such as licensing authorities, payroll or income tax departments. If you are closing an S corporation, LLC or a C corporation, shareholders or members of the company must vote to dissolve it. Only then can paperwork be filed with the state office in which the business was incorporated. If your company was operating in other states, paperwork must be filed in each of those states as well. If you are only withdrawing from a state, you may still need shareholder or member approval, depending on your bylaws or operating agreement. And, you will still need to file a Certificate of Withdrawal in each state. The requirements for filing a Certificate of Dissolution or Withdrawal vary from state to state. This can potentially be a time consuming process itself. A professional registered agent can help move this filing along more efficiently.

Notify the IRS

You must settle any outstanding tax obligations with the IRS and submit required documents to formally declare your business as closed. The IRS website has a business closing checklist to help you with this process. Most states require a similar process with regard to their taxes. An accountant or tax advisor can also assist you in preparing these documents.

Close Accounts and Distribute Remaining Assets

As a construction company owner, you likely have many business permits; upon dissolution, you must cancel all licenses. Also, remember to cancel your Employer Identification Number (EIN) with the IRS, once your final tax returns are filed. In addition, you should cancel any business bank or credit accounts to prevent issues such as business identity theft. After financial obligations have been taken care of, company owners can divide the remaining resources according to share of ownership or the terms of the operating agreement. Distributions must be reported to the IRS and, in many cases, to the states in which you have been paying taxes. By minimizing penalties that stem from improper dissolution, you can maximize your take-home allocation for your next business or personal ventures. Avoid legal complications and financial worries by talking to trusted advisors, such as a professional registered agent and accountant. Properly dissolving your company is a process that requires diligence, but if you take care to complete all the necessary steps, you will set yourself up for less stressful next chapter ahead.

Jennifer Friedman is the CMO of the small business segment of CT, a Wolters Kluwer Company, which provides legal compliance solutions to the small-business community. In this role, she directs all activities related to digital marketing and advertising to help build the brand through innovation, partnerships, and enhancing the customer experience.

Have an idea for a guest blog for Construction Today? Contact alan.dorich@phoenixmediacorp.com or jim.harris@phoenixmediacorp.com.  

Current Issue

Check out our latest Edition!

 

alan blog ct

Contact Us

Construction Today Magazine
150 N. Michigan Ave., Suite 900
Chicago, IL 60601

  312.676.1100
  312.676.1101

Click here for a full list of contacts.

Latest Edition

Spread The Love

Back To Top