Legal Question in Business Law in California

Re: Ending an on-line web corporation

You should file dissolution paperwork with the Secretary of State. Accordingly, you will be conditionally dissolved, pending tax liability. Assuming your corp owes no income or franchise taxes, the whole process is fairly easy and an attorney can help you with it for a small fee.

Re: Ending an on-line web corporation

You need to prepare and file certain documents with the California Secretary of State. Normally, the corporation files a Certificate of Election to Wind Up and Dissolve, then a Certificate of Dissolution. If all the shareholders agree to wind up and dissolve, you can simply prepare a Certificate of Dissolution with the verbiage, "The election to dissolve was made by the vote of all the outstanding shares. " That document gets filed with SecState.

You can find exemplars of the relevant forms at SecState's website:

http://www.ss.ca.gov/business/corp/corp_stkdissinfo.htm

I would also recommend that the Board of Directors prepare a formal resolution of the decision to wind up the business and keep it with the corporate records. If all the shareholders agree to the dissolution, I'd recommend all sign a Shareholder's Written Consent ratifying the Board's resolution to dissolve. Some might justifiably think that's gilding the lily. Still, I'm more comfortable when my corporate clients keep a clear paper trail of compliance with corporate governance standards.

As to the IRS issues, I'm not a tax practitioner, but you do want to insure that the Service is duly notified that the corporation has ceased doing business. Your corporate accountant can probably assist with preparation of terminating returns, and other documents to insure that the Service will no longer be expecting tax returns and such. There may also be forms that you need to file to deactivate your Federal Employer Identification Number. Again, your CPA should know all about that.

Please keep in mind that although the corporation will officially dissolve, even after dissolution it continues to exist for the purpose of dealing with its creditors and debtors. Any obligations the corporation owes remain in force after dissolution and any obligations owed to the corporation remain in force and are collectable by the corporation after dissolution.

Best of luck, and please let me know if I can be of further assistance.

Now the inevitable caveat:

The foregoing information is provided as an accommodation only, and does not constitute specific legal advice or a biding legal opinion based on a comprehensive review of all relevant facts, nor can provision of such information be construed as creating an attorney-client relationship.