There are a variety of reasons why a business would voluntarily close. Maybe an owner became ill or suddenly passed away. Maybe there is no longer a competitive market for the business. Maybe the business or the funds were mismanaged. The reason could be anything and everything.
When a business’ owners decide it’s time to close the business, they must take several legal steps in a process called “dissolution.” You can read the full Florida statute by clicking here. The main takeaway is this: You can’t simply shut the doors, cease all operations, and walk out the door if you own a business in Florida (or anywhere). If you do, you will likely be personally liable for the business’ debts.
In a nutshell, there are two ways to dissolve a Florida corporation. If the incorporators have not issued any shares or started doing business, then it can submit Articles of Dissolution. The other way is by vote of a majority of shareholders at a shareholder meeting. Of course, the laws for dissolution are more nuanced than what we cover in this blog. If you need help dissolving your Florida corporation, seek the help of a trusted Florida business law attorney.
NOTE: Winding down is the phase after dissolution. After the dissolution phase, your corporation will continue to exist, but only to “wind down” or to take care of the last few remaining loose ends. During this time, the business cannot continue to operate normally except to take care of those loose ends. This is covered under the Florida Business Corporation Act (BCA), which you can view here. According to the BCA, allowable actions during the winding down process include:
- Collecting the corporation’s assets
- Disposing of its properties that will not be distributed to its shareholders
- Discharging or marking provisions for discharging its liabilities
- Distributing the remaining property to the shareholders according to their interests
- Doing everything else necessary to wind up the corporation and liquidate its assets, business, and affairs
All liabilities of the corporation must first be discharged before it can distribute any remaining assets to the shareholders.
Contact the Trembly Law Firm
At Trembly Law, we have helped many Florida corporations go through the dissolution and winding down process. There are legal nuances to every dissolution that DIY legal forms don’t cover. Please call us at (305) 431-5678 or contact us here if you have any questions. Our qualified team would be more than happy to assist you.