Closing/Dissolving a Business
You may decide to close your business without selling it. If your business is a sole proprietorship, you alone can make the decision to close the business. But, if your business is a partnership or corporation, the owners (partners, shareholders, etc.) must agree to dissolve the business according to the method set out in any written agreements that created the business or list the steps to follow in order to close or dissolve the business. If no written agreements exist or they do not apply to closing or dissolving the business, there may be statutes and rules that affect how the business must be closed or dissolved. For example, businesses partnership debts that are unpaid create personal liability for the partners. If you dissolve your corporation without notifying and paying or otherwise resolving creditors’ claims, creditors who have brought claims against the business may seek to assert their claims against you personally.
Some key steps in closing/dissolving your business include:
- Notify government agencies that you are dissolving your business;
- Notify all lenders and creditors and settle any remaining debts;
- Collect all the money the business is owed (accounts receivables) or sell off any outstanding judgments, claims, and debts owed to the business;
- Sell off or transfer any assets, including equipment, tools, real estate, leases, intellectual property, inventory, etc.;
- Cancel registrations, permits, licenses, insurance policies, and business names;
- Comply with NY Labor laws, including issuing final paychecks and providing sufficient WARN notice if you have 50 or more employees;
- Close your Employer Identification account by contacting the IRS;
- Close your business bank account and cancel any business credit cards;
- Maintain business records for the required length of time, depending on the type of record.
Legal Editor: Dan Brecher, November 2014 (updated November 2018)
Changes may occur in this area of law. The information provided is brought to you as a public service with the help and assistance of volunteer legal editors, and is intended to help you better understand the law in general. It is not intended to be legal advice regarding your particular problem or to substitute for the advice of a lawyer.