Business Tax Attorneys – Company Dissolution
Company Dissolution
Dissolution of business could be for variety of reasons for example: bankruptcy, retirement, or a change in career direction. When a business entity is no longer doing business or even if it was never used for anything, it is very important that it follows the legal steps in “winding itself up” as a legal entity.
A business Corporation, S Corporation or an LLC is an entity created under authority granted by the state. Its existence may only be terminated by the state. The Business Law provides a procedure for dissolving a corporation or an LLC. All legal entities can only be dissolved through formal action, not by a letter or phone call. You remain liable for all taxes, assessments, fines, penalties and interest until you receive a certificate of dissolution from the Secretary of State.
There are typical actions that are taken when closing a business on Federal and State Level:
Federal (IRS)
• You must file an annual return for the year you go out of business.
• If you have employees, you must file the final employment tax returns.
• Make final federal tax deposits.
• File final quarterly or annual employment tax form.
• Issue final wage and withholding information to employees.
• Report information from W-2s issued.
• File final tip income and allocated tips information return.
• Report capital gains or losses.
• Report partner’s/shareholder’s shares.
• File final employee pension/benefit plan.
• Issue payment information to sub-contractors.
• Report information from 1099s issued.
• State (Where your business is formed):
• You must file an annual return for the year you go out of business.
• If you have employees, you must file the final employment tax returns with your State.
• Make final State tax deposits.
• File final quarterly or annual employment tax form.
• If you collect Sales Tax in your State. File final Sales Tax Return.
Why should I close business officially even though I am no longer doing business?
If you will not close your business with the state, your corporation will be considered as a legal entity and accordingly you will be liable to pay taxes and other returns thereof. So it’s highly recommended that you should clos
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e your business as per the instructions and rules defined by the state and get your certificate of dissolution.
How can I legally cancel a company?
Canceling a company means you are going to wind up your business. In this connection the first step is to hold a meeting of corporation’s board of directors in which they need to propose a resolution for business closing. A vote must be taken and the minutes of the meeting must be recorded and retained in the corporate records. Then that proposed dissolution action must also be approved by majority shareholders
Secondly, the corporation needs to file Articles of Dissolution with the secretary of state. This filing of Article of dissolution varies from state to state. In some states this is done with a simple certificate while others require a more complex process.
Once you get approval from to state to cancel your corporation or cancel an LLC, then the company’s assets will be distributed to its shareholders. For more detail feel free to contact with InfoTaxSquare. Our experts are pleased to serve you and suggest you the best legal way to dissolve your corporation.
What happens if I fail to officially close LLC / close corporation?
If, for any reason, you do not close your LLC/ close corporation with the state, the consequences can be severe and will take you paying heavy penalties in different areas. Some of the consequences you may be indulged to deal with include the following:
• Personal Liability. Even if you have already stopped your business transactions, legally your corporation, Directors, Officers and shareholders will be still considered as personally liable for the corporation unless you file cancellation legally.
• Tax Liability. Until you get certificate of dissolution, your corporation will be held liable to file all relevant federal, state, and municipal tax returns. Failure to file these returns will result in the heavy penalties and fees associated with the late filing. And many more
If the corporation does not have any shareholder, who will approve the Corporation termination or LLC termination proposal?
If a corporation does not have officers, dissolution must be approved by a majority of the directors in office at the time dissolution is approved. The corporation shall provide notice to directors of a director’s meeting where an approval for corporation termination will be sought. The notice must state that the purpose of the meeting is to consider the proposed business termination
Is it necessary to notify every member about the boards meeting?
The corporation must notify each director or shareholders, whether or not entitled to vote, of the proposed members’ meeting. The notice must state that the purpose of the meeting is to consider dissolving the corporation.
When Will the Corporation be withdrawn?
The corporation will be withdrawn and its existence ended on the date the Certificate of Dissolution is filed and approved by the State. The Business Corporation Law does not permit the effective date of dissolution to be other than the date of filing of the Certificate of Dissolution by the State.
Who can Sign the Certificate of Dissolution?
The Certificate of Dissolution must be signed by an officer, director, attorney-in-fact or a duly authorized person. The name and title of the signer must be typed or printed opposite the signature.
By: Infotaxsquare
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www.infotaxsquare.com providing business documents filing in all 50 States
Getting the best tax attorney is very important when you want someone to take care of your finances. In order to do that you need to know how to choose the best tax attorney. Doing some research will surely help you to know what aspects to look for when you intend to hire the best tax attorney. You will then know exactly what question to ask the aspirants for the job that you offer. If you do your research you will also know what kinds of references to search for when you want the best tax attorney. It is in your interests to ensure the investment you are making is worthwhile.
If you really need the best tax attorney the first thing that you have to inform yourself of is the experience that the attorney has. This means that you have to know what education he/she has and if he or she actually worked as a tax attorney. You should ask if the person ever worked for the IRS because if he or she did, it will be much easier to negotiate in your benefit. If your problem is a non-criminal issue then the best tax attorney for you is the one that has experience in the IRS Office of Chief Counsel. Even if we should give a chance to people that do not have yet this kind of experience if you have a difficult tax matter the best tax attorney is the one that has worked for the IRS or for another financial authority.
The minimum that a tax attorney should have is a Master’s of Law in Taxation. This is also named the LLM in taxation and it shows that the person studied the tax law for at least one year. The best tax attorney should continue to learn about the tax law even after he or she graduated because the tax law is constantly changing. This aspect could be verified by searching for evidence like articles published by the tax attorney in publications in the domain. Quality advice can be given only by the tax attorney that knows what changes occurred in the tax law evolution.
A specialist is the best tax attorney for you if he or she already handled the exact matter that you have now. When you want to know this you have to put questions to the about the topic that you are interested in and you should start a detailed discussion. You can read more about tax attorney essentials at http://www.taxattorneyresource.com
There are some other general but important aspects that you must consider too when you want the best tax attorney. The specialist should have good communication skills and should be a good negotiator. In this way, he or she will be able to do the best in your case. An essential requirement is for you to search more than one option when you intend to employ the best tax attorney.
Article by Dean Forster at http://www.taxattorneyresource.com
A resource dedicated to information on tax attorneys, including income tax law, fees, salary and more at Tax Attorney
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http://EzineArticles.com/?expert=Dean_Forster
Personal Taxation – Budget 2009 India
Budget for the year 2009-10 was presented on 6th July, 09 by the Finance Minister Mr. Pranab Mukherjee.
Given below is a brief on the changes in Personal Tax.
1. Increase in Tax Exemption – The basic exemption for the tax payers was increased by Rs. 10,000/- for women and general tax payers and by Rs. 15,000/- for the senior citizens.
2. Elimination of Surcharge – Surcharge on income above Rs. 10 lakhs for personal income tax payers is removed.
3. Deductions under Section 80DD – There is a raise in the deduction of maintenance of medical treatment for dependents from Rs. 75,000/- to Rs. 1 lakh.
4. Abolition of Fringe Benefit Tax – Abolished the Fringe Tax Benefits provided by the employers. Now reimbursements will be taxed at the marginal tax rate.
5. Increase in Wealth Tax Exemption – This exemption has been increased from Rs. 15 lakhs to Rs. 30 lakhs.
6. Expanded Scope of Section 80E – Annual deduction of the interest on loans taken for higher education has been extended to cover all the fields of studies including vocational courses.
7. Automation of Tax-filing – Simpler and quicker tax filing is expected to be implemented very soon.
The new slabs for the tax-payers
For General Payers
For income up to Rs. 160,000 – Tax is Nil
For income from Rs. 160,001 to Rs. 300,000 – Tax is 10%
For income from Rs. 300,001 to Rs. 500,000 – Tax is 20%
For income Rs. 500,001 and above – Tax is 30%
For Women Tax Payers
For income up to Rs. 190,000 – Tax is Nil
For income from Rs. 190,001 to Rs. 300,000 – Tax is 10%
For income from Rs. 300,001 to Rs. 500,000 – Tax is 20%
For income from Rs. 500,001 and above – Tax is 30%
For Senior Citizens
For income up to Rs. 240,000 – Tax is Nil
For income from Rs. 240,001 to Rs. 300,000 – Tax is 10%
For income from Rs. 300,001 to Rs. 500,000 – Tax is 20%
For income from Rs. 500,001 and above – Tax is 30%
Effects of the budget on personal tax: There is a scope of restructuring the salary structure taking into account the removal of Fringe Benefit Tax.
“With the withdrawal of FBT, we can look forward to companies reintroducing and strengthening superannuation plans as the third retirement benefit for their
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staff,” Gangapriya Chakraverti, business leader, information product solutions, Mercer Consulting India said.
“Removal of Fringe Benefit Tax means that perquisites will be taxed in the hands of the employees at a marginal rate of tax applicable to them – we will have to await the valuation rules applicable” – was the quote given by Mr. R. Sankar – Pricewater Cooper India Leader for People and Change Practice.
There were also not so positive responses to the removal of FBT. Deloitte India’s chief people officer MR. Dhanajay Bansod said removal of FBT would have a neutral impact on the employees and the effect would be clear only after the perquisites become clear.
HR experts say the removal of 10 percent surcharge is also a good move, which would be beneficial for the salaried class.
To conclude we can say that this budget sets a tone for the other major economic reforms.
By: Andrew GMS Chen
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If you are looking for information on Singapore, refer to Singapore Income Tax guide and Singapore Tax Rate Guide
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