How to dissolve a Shenzhen company? Dissolving a company means to officially and formally close the business. While ceasing operations is part of this process, there's more to dissolving a business than just locking the front door. Assets and liabilities must be dealt with properly in line with the relevant rules and regulations locally.
Reasons for Dissolving a Business
Businesses can close by simply shutting down operations. The reasons for deregistering a company may vary. Generally, the following reasons may involve:
1. Low cash flow;
2. Negligent accounting practices;
3. Mismanagement;
4. Succession-planning failure;
5. Partnership disagreements;
6. Noncompliance with mandates.
How to Dissolve a Shenzhen Company?
1. Filing the Dissolution Paperwork
The first step to dissolving your business is for the owners or board of directors, depending on whether the company is publicly or privately held, to create a resolution to dissolve. Once that's agreed to by all shareholders, your company must file articles of dissolution with the related office. This provides official legal notice that the business is closing.
2. Liquidating Assets
Any property that's owned by your corporation is liquidated, which means selling any assets that aren't used as collateral for loans. Property which is used as security for loans must either go to the institution that loaned money against it, or be paid off by your company before being sold for cash. Whether you're able to liquidate all assets depends on whether your company is insolvent at the time of dissolution and the amount of cash on hand plus liquid assets.
3. Settling Liabilities
The next step in dissolving your business is to settle all outstanding liabilities. Liabilities are any obligations the business has incurred before closing and include goods and services that have been paid for but not delivered as well as any short- or long-term debts. One critical obligation is filing the final payroll and corporate income tax forms. Once the liabilities have all been settled, any remaining cash value in the business is distributed to the individual owners or shareholders.
4. Notification
Once your company has voted to dissolve, formally filed articles of dissolution with the incorporating state, liquidated its assets and settled its debts and other obligations, a final legal notice is sent out to any entity that may have an interest in the company. Laws on what parties must be notified and how much notice is required vary by state, but one universal requirement is to notify the Internal Revenue Service that your business is closing and will no longer be filing tax returns.
The dissolution of a company is a final act that sets a small business on the course for termination. Although dissolution terminates the legal status of a company, the company must still wind down, liquidate its assets and take care of other matters related to ending its existence. Should you need any help, Tannet is glad to assist. We provide a comprehensive business services ranging from company setup to company management and company cancellation.
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