Understanding Business Dissolution Process
What is Business Dissolution?
Business dissolution refers to the process of terminating a business entity’s existence, such as a corporation, partnership, or limited liability company (LLC). Dissolution can occur voluntarily or involuntarily, and it involves winding up the business’s affairs, distributing its assets, and terminating its legal existence.
Voluntary Dissolution
Voluntary dissolution occurs when the owners or shareholders of a business entity decide to dissolve the business. This may happen for various reasons, such as retirement, a change in career goals, or a desire to start a new business venture. The owners must follow the procedures outlined in the entity’s governing documents and state law to dissolve the business properly.
Involuntary Dissolution
Involuntary dissolution happens when the government or a court orders the business to dissolve. This can occur for reasons such as failure to pay taxes, violating laws or regulations, or failing to comply with the entity’s governing documents.