The Florida Bar describes business dissolution as a “drastic measure” to resolve conflicts between owners, noting that this process could lead loss of control for all members of a limited liability company (LLC). However, business dissolution could also be an appropriate choice in many other situations. For example, business dissolution can facilitate the sale of assets and the distribution of funds to owners – leading to a potentially profitable “business exit” strategy. Business dissolution can also lead to debt restructuring and the eventual creation of a new entity free from those liabilities. Those who are planning clean business exits may wish to discuss their options with an experienced business attorney in Clearwater. Consider contacting Clearwater Business Law at (727) 502-6874 to discuss potential exit routes. We serve business owners throughout Pinellas County.
What Is Business Dissolution in Florida?
To “dissolve” a business is to end its existence as a legal entity. Before the business entity can dissolve, it must go through various steps – including the resolution of outstanding debts and liabilities. The business must also file specific forms with the government before it can cease operations. Although business dissolution is a common choice for LLCs and corporations, it is also a necessary step to end partnerships, cooperatives, nonprofits, and other types of businesses in Florida. That being said, the business dissolution process may differ depending on the specific type of business structure.
A crucial step during business dissolution is the distribution of assets to the owners. This step occurs after the payment of debts, and it has significant implications for those planning effective exit strategies. If a company has more liabilities than assets, then there may be no remaining assets to distribute to the owners. This type of outcome is often consistent with bankruptcy. In contrast, a business with more assets than liabilities may be able to distribute significant assets to the owners. This type of outcome is often consistent with retirement, or the continuation of a business career after a successful initial venture.
Why Do People Choose Business Dissolution?
Owners choose business dissolution for three main reasons: Bankruptcy, retirement, or the creation of a new business entity. For those who need to dissolve businesses due to bankruptcy proceedings, this process can be challenging. Often, it is not a voluntary process but rather a necessity based on financial realities. That said, a bankruptcy can still be an effective business decision if owners proceed strategically.
For those choosing business dissolution due to retirement, outcomes are often more positive. This could represent the end of a long and successful business career, with an opportunity to “cash in” and enjoy the profits well into the twilight years of an entrepreneur. That said, one should still dissolve their business effectively to maximize profits and ensure a stable retirement. Those seeking to dissolve their businesses to create newer entities often have more complex goals and needs. This is especially true if the goal of business dissolution is to eliminate the debts of the previous company before moving forward under a new entity.
What Could a Business Dissolution Lawyer Help With?
Some business owners may feel unsure about hiring a business dissolution lawyer to assist with this process. Note that there is no legal requirement to hire a business dissolution lawyer when engaging in this process, and owners can theoretically navigate this process alone. That said, many owners choose to enlist help from lawyers, and these legal professionals could offer varying types of assistance based on the specific goals of each business. The type of assistance offered by a lawyer depends on whether owners are choosing to dissolve their businesses due to bankruptcy, retirement, or the launch of new ventures.
Regulatory Compliance
Regardless of the reason for business dissolution, lawyers can assist with regulatory compliance. All business dissolutions must follow various required steps according to Florida law. According to the Department of State, this includes the drafting of articles of dissolution. These articles are different depending on whether the entity is a corporation or an LLC. Note that there may also be federal requirements associated with corporate dissolution in Florida. This includes the filing of Internal Revenue Service (IRS) Form 966, which may be mandatory for corporations seeking to dissolve or liquidate stock. Consider discussing regulatory compliance during a business exit with Clearwater Business Law.
Debt Restructuring
Lawyers may also be able to assist with debt restructuring during business dissolution. This could be particularly important for owners navigating bankruptcy proceedings, but it is also a crucial step for those who wish to retire after business dissolution. The more an owner minimizes these debts, the more remaining assets they will have for their retirement. Some law firms can assist with both business dissolution and bankruptcy proceedings. Debt restructuring may be a particularly high priority for entrepreneurs seeking to launch new ventures after strategically dissolving their initial businesses. Business dissolution lawyers may be able to help by negotiating with creditors and formulating creative debt resolution strategies.
Minimizing Disputes
A lawyer may also help owners minimize disputes as they plan their business exits. Sometimes, disputes may lead to the dissolution itself. Whatever the case may be, it makes sense to distribute assets in an equitable manner to ensure “clean business exits” with no future legal disputes. Litigation can be expensive and time-consuming, and business lawyers could help resolve disputes through alternative pathways like mediation or arbitration.
Discuss Your Business Exit With Clearwater Business Law
Owners may decide to dissolve their businesses for many reasons. For some, this is a necessary step during bankruptcy proceedings. For others, business dissolution represents a final goal after a long and successful career, potentially making the entry point into retirement with significant profits. Still others view business dissolution as a turning point in their careers, potentially leading to new ventures, innovative ideas, and fresh opportunities. Due to these varying factors, online research alone may not provide the same level of targeted, personalized guidance as a business dissolution lawyer in Clearwater. Continue discussing this subject with Clearwater Business Law by contacting us at (727) 502-6874. We serve business owners in Clearwater, Dunedin, Largo, New Port Richey, Oldsmar, Palm Harbor, Pinellas Park, St. Petersburg, and Tarpon Springs.