Starting a business and running a business both take a lot of courage. Many Baton Rouge entrepreneurs dedicate a lot of financial resources and time into making their business visions come into reality. Although many of these businesses are successful, others are not.
There may be a variety of reasons why a business struggles to thrive, including shrinking markets, aggressive competition, increased overhead, and even simply losing the desire to run a business.
Regardless of why a business owner chooses to cease operations, he or she will need to ensure that the business’s affairs are adequately wrapped up to protect his or her financial interests and to comply with the law.
Generally speaking, the dissolution of a business involves the selling of assets to pay off creditors, but depending on the type of business at issue, there may be other requirements. For example, a corporation’s bylaws may specify how remaining assets of the business are to be divided amongst interested party.
Dissolving a business isn’t always voluntary, either. Sometimes creditors file lawsuits in an attempt to recover debts, which can lead to a court-ordered dissolution of a business. Regardless of whether dissolution is voluntary or involuntary, assets and creditors will both have to be dealt with in a satisfactory manner.
Although dissolving a business sounds a lot like bankruptcy, it is different. When a business dissolves, it ceases operations altogether. Through bankruptcy, some businesses are able to keep their stores open and enter into a repayment plan that seeks to pay off creditors and establish a healthy financial plan going forward.
Deciding to dissolve a business can be stressful, especially for those who have put a lot of time and effort into building it. Yet, shedding oneself of a burdensome business entity, whether through voluntary or involuntary means, can lift a burden off of a business owner’s shoulders.
The process can be lengthy and complicated, though, which is why it is usually best to discuss exit strategies with an attorney who is experienced at handling these matters.