Hi. Lee Phillips here.
I want to talk to you two seconds about how you terminate a company
and I'm going to take a very narrow view of this.
A lot of people have companies
they're talked into them at the seminars
they start them up,
they run the business for two seconds
it doesn't work
they don't owe anybody money
but they've got this little company,
this corporation, this LLC, partnership, whatever it is
and it just sits there.
Another YouTube video we talk about the liabilities of having it just sit there
and there are liabilities
so we've made a decision
we're going to shut it down
we don't have any creditors we don't owe anybody money.
How do you shut it down?
now if you owe people money and you're going bankrupt and all this and that and the other
that's a whole different deal
I will give you that
but there are lots of people have the small company
don't owe anybody money
they may have a little money in the bank account
take it out of the bank account, close the bank account
and then let's shut the company down.
You do it two ways.
You do it the informal way
which means you just don't pay any more money
no state fees, no nothing.
When you don't pay the state fee on time, guess what?
The state says that you are a bad boy.
You're "not in good standing" is the way they term it
and your company goes into default
it goes defunct by definition
and it just kind of sits there out in limbo.
State keeps it but it isn't active
It's no good.
The other way you do it is you formally shut it down
and each state has a procedure
you can go on most states' websites
maybe not California
but most states' websites and you can get a form for dissolution of a company
and they're going to have you fill out the form
it's going to ask you a bunch of accounting questions
how much money did you owe everybody
and they want to make sure you're not screwing your creditors
you fill that out
you send it into the state
some states require fees, some states don't.
You pay your fifty bucks or whatever it is
and the state will officially terminate this company.
It's dead as far as the state's concerned.
Okay we've taken care of the legal aspect of it. What else do we have to do?
Well there may be a tax aspect to it.
if you've gotten a tax ID number, EIN whatever you want to call it
for your company then we need to make sure that the IRS knows that this company has died
and that they're not going to be expecting any more tax returns from you.
If you haven't been filing tax returns
for your corporation, either an S corp or C corporate taxation structure,
now that could be an LLC taxed under Subchapter S or taxed under Chapter C
if you haven't been filing your tax returns and stuff
you're going to need some professional help.
Call the tax guys in my office if nothing else because you're in trouble.
We'll assume you're not in trouble. You've been filing your tax returns
you haven't done any business so you've just been writing zeros all the way down the return
That's okay.
You're going to file a final tax return
and you don't have to wait till the end of the year you can do it today
you file a final tax return for the company
and on the front page of the tax return there's a little box
and it says "Is this the final return?"
and you check the little box.
And the IRS will kill that EIN, that tax ID number for your company,
they won't issue it to another company. It's dead.
So we've now killed it with the state,
we've now killed it with the IRS
we don't have any bank accounts we don't have anything going.
Your company's dead. Congratulations you killed your company
and you want to kill your company
do not have these dormant little companies hanging around
because of the liabilities
if no other reason
and just the pain, the hassle of having this company
just get rid of it.
that's how you kill them.
This is Lee Phillips
talking about how to dissolve a small company.