Closing a Business in Georgia: Everything You Need to Know
The process of closing a business in Georgia depends on how you have structured your business.3 min read
2. Commencement of Winding Up
3. Finishing Up LLC Activities
4. Claimants and Creditors Notification
The process of closing a business in Georgia depends on how you have structured your business. For instance, if you are running a sole proprietorship, then you usually just need to cease business operations to end your company. On the other hand, with a limited liability company (LLC), the dissolution process is much more complicated.
Dissolving Your Georgia LLC
When forming an LLC, you register your company at the state level. If you want to end your Georgia LLC, you would need to complete the dissolution process. Once your company has been formally dissolved, creditors can no longer file claims against the business. In some cases, your LLC can be involuntarily dissolved. For example, a court could order that your company be ended, or you could face dissolution because you have failed to either pay a necessary fee or fulfill your filing requirements.
Once you have made the decision to end your LLC, examine your operating agreement and Articles of Organization. When writing these documents, you likely included a procedure for ending your company. In most cases, the members of your company will need to vote on whether or not to begin the dissolution process.
You need to be sure that you're following the guidelines for dissolution as described in your formation documents. Generally, these rules can include a requirement that you notify members about the vote and a provision for when the vote can take place. The Georgia LLC Act allows LLCs to be dissolved with the consent of all company members.
Commencement of Winding Up
When dissolving your LLC, you must give claimants and creditors notification that you are ending your company. In Georgia, you can make this notification by filing a Statement of Winding Up. As with most documents related to your LLC, you file this statement with the Secretary of State. The Statement of Winding Up can be a very bare-bones document, providing just a few pieces of information. At the very least, you need to include the name of your company and a statement that your LLC has ended and is currently finishing up any outstanding business activities.
With this statement, your creditors can decide if they wish to file a claim before your company has completely ended. To make sure that your Statement of Winding Up is correctly written, you should consider getting help from an attorney.
Finishing Up LLC Activities
After you have dissolved your LLC, your company will stay active for as long as it takes to wind up a few matters. The winding up process is usually quicker and more effective when handled by multiple managers and members. Unlike other states, the laws in Georgia don't fully describe what activities you should complete during the winding up process.
When winding up the activities of your company, you should make sure that you:
- Resolve any outstanding company debts.
- Dissolve and distribute your company's assets among its members.
- Handle any other issues needed to end your company, including terminating contracts.
Claimants and Creditors Notification
Notifying your creditors that your company is ending is one of the most important parts of the dissolution process. As mentioned, once you file your Statement of Commencement of Winding Up, you also have the ability to alert your creditors to the dissolution of your company. Understand, notification is not a legal requirement of dissolution, but letting your creditors know your company is ending will help protect you from future liabilities, and it will also make it easier for you to allocate your remaining assets.
Mailing a written notification is the primary method of alerting creditors to your company's end. If you want to notify your creditors in writing, you should be sure that your notice includes the following information:
- A description of information a creditor should provide when filing a claim.
- An address where the claim can be mailed.
- A deadline for filing claims against the company. This date must be at least six months from the date the notice of dissolution was sent.
- A statement that the claim will be rejected if not delivered by the listed deadline.
- A statement that your company will reject or accept claims and provide notification of such.
You should also publish a notice for dissolution in a newspaper to alert claimants of which your company may not be aware.
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