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Business Law Firm – Start A Corporation Dissolution
How Do We Begin A Corporation Dissolution?
Business Law Firm Orange County, Q#13003: How do we dissolve our small business corporation now?
My wife created S corporation in 2005 for the apartment units she owns. We never filed tax returns on the corporation name but we filed it on her personal tax returns with the California Franchise Tax Board. California Secretary of State suspended our entity.
How do we dissolve the corporation now?
Business Law Firm Orange County, A#13003: Here are a few things to think about with a corporation dissolution.
In California, the dissolution of the corporation can be started by the shareholders making an “election” to dissolve the corporation. The election can be made by “written consent” of the shareholders. The election can also be made by a formal vote of the shareholders at a meeting of the shareholders.
The vote or written consent will need to be made by at least 50% of the outstanding shares of the corporation. If there were no shares issued, the board of directors could make the election.
If there were no directors elected or named in the original Articles of Incorporation, this decision could be made by a majority of the incorporators of the corporation. The incorporator or incorporators will be named in the Articles of Incorporation.
After the formal election to dissolve the corporation has been made, the corporation is required to file documents with the Secretary of State.
To dissolve, the corporation must file a Certificate of Election to Wind Up and Dissolve prior to or together with a Certificate of Dissolution. However, if the election to dissolve is made by the vote of all the outstanding shares, only the Certificate of Dissolution is required.
As soon as you have filed the Certificate of Dissolution, the Secretary of State will contact the California Franchise Tax Board to determine whether or not the corporation is current on its tax filings and payments. This is the part where it gets expensive for you.
If the corporation is current on tax filings and tax payments, the request for dissolution will be granted.
If the corporation has not made all of the necessary tax filings and is not current with its tax payments, the certificate will be rejected by the Secretary of State. The corporation will be required to file all of the late tax returns and pay the minimum franchise tax fee for each year of outstanding tax returns, including any penalties and interest that have accrued, in order to complete the dissolution.
I hope this information gives you some idea of the basic process you will need to go through to dissolve the corporation now. If you need some additional guidance on the process of dissolving a corporation, please call the Orange County Business Law Firm – The Incorporation Attorney, the Law Offices of Gale and Vallance, APC at 714-634-4838.
Andrew Gale – Incorporation Attorney
Attorney at Law Offices 1820 West Orangewood Avenue, Suite 104a, Orange, CA 92868 Office: +1 (714) 634-4838. I provide legal advice, counseling and related services to entrepreneurs including the formation and management of their corporations and estate plans.
My Law Office is based in Orange County California and I have practiced law for 30 years. I have given advice to more than 1000 small business owners on the best ways to set up a company, what types of business entities (corporations, limited liability companies, partnerships) are best suited for them and their small business, how to legally run the business to protect their assets and how to successfully transfer the business to family or key employees through the proper use of estate planning and trusts.
