Question: Dissolving my Corporation, What Will Be My Personal Responsibility?

Written by: Andrew Gale - Orange County - Small Business Attorney

If I am an S corporation and I file to dissolve my corporation, what will be my personal responsibility? I do not believe I would be able to remain in operation being there would not be any funds or credit to operate.

Answer: Here are some general thoughts

Orange County Business Lawyers, Q#01024, S Corp Dissolution

When a business entity is closing its operation, steps must be taken to remove the entity from the tax and public records.

The shareholders of the corporation and the board of directors will form a plan of dissolution which includes taking care of outstanding corporate liabilities (debts of the corporation) including any outstanding taxes.

Technically, domestic corporations will “dissolve” the existence of the corporation. This means that you must go through the process of officially closing down the business with the California Secretary of State and the California Franchise Tax Board.

Dissolving my Corporation what will be my personal responsibility - Andy Gale Small Business Lawyer Orange County AnswersMany people who have set up corporations in California without the assistance of a business attorney make the mistake of thinking that they can just walk away from the corporation if it runs out of capital to operate. This is simply not the situation, nor is it best practice for managing the annual corporate records.

In all cases, the business must be in good standing. This means that the corporation must be deemed “active” with the Secretary of State.

To check the status of a corporation, you can go to the website for the Secretary of State where the information is available online. In addition, a Tax Clearance Certificate must be issued for both domestic and foreign for-profit corporations with assets.

All documents for dissolution or withdrawal, including the request for the tax clearance, will be submitted together as part of a package to the “Division of Revenue” better known in the state of California as the California Franchise Tax Board.

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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.