Should You Hire a Lawyer When Dissolving a Business?

Business dissolution is when a business is legally closed. People dissolve businesses for various reasons, including financial struggles, partnership issues, shareholder disputes, or simply a change in business direction. If you are a business owner and are about to initiate a dissolution action, you may be wondering if you should hire an attorney to help you with the dissolution process. The law does not mandate hiring an attorney when establishing or closing a business. However, like in many other situations where hiring a lawyer is not a legal requirement, hiring a lawyer when dissolving a business is highly advisable. People close down companies without the assistance of an attorney. However, business dissolution can be a complex process.

While it can be tempting to save money by handling the dissolution process without legal help, below are several reasons why it is best to hire a lawyer when dissolving a business;

Evaluating Contracts

As a business owner, you may have contracts with suppliers, customers, landlords, or other parties. Before closing down your business, there may be contractual obligations that you need to address. An attorney can evaluate all contracts and help you terminate them without creating a risk of breach of contract claims or other claims. An attorney can assess contracts to check if there is a chance that legal issues might arise in the future.

Handling Outstanding Debts

One vital thing you must do before dissolving your business is to clear any outstanding debts to the extent possible. An attorney can guide you on how to prioritize debt payment. They can also help you negotiate with creditors and reach favorable agreements.

Protecting Your Assets From Dishonest Creditor Claims

Sometimes, creditors make dishonest claims against business owners. For example, a creditor can try to extract more money from you than you owe them. A skilled lawyer can assess the validity of creditors’ claims and defend you against dishonest creditor claims. They can ensure you don’t lose your assets to dishonest creditors.

Helping With Filing the Necessary Paperwork

When dissolving a business, there are some crucial documents that you may need to file. An attorney can ensure all pertinent documents are correctly filed with the applicable entities. For example, if you are dissolving a California business, an attorney can help you file your final tax return as required by the California Franchise Tax Board (FTB) and the relevant forms you need to file with the California Secretary of State (SOS).

Asset Distribution

Depending on your business structure and the terms of agreements or contracts, you may need to distribute assets among partners or shareholders before officially closing your business. An attorney can ensure that assets are distributed fairly and in accordance with the law.

Handling Employee Issues

If you have employees, there may be an added layer of complexity. There are several legal requirements that you may need to follow. A lawyer can help you deal with employee issues. A skilled attorney can ensure you fulfill your obligations as an employer in a legal manner.

Contact Us for Legal Help

If you are considering closing your business in California, contact our skilled business attorneys at SAC Attorneys LLP for legal help.