Business Dissolution or Termination

Reston Law Group Business and Corporate attorneys assist clients in addressing questions about all phases of the business cycle from formation through merger or acquisition, or in some cases through dissolution or termination. 

Clients have questions about the process of terminating or dissolving their Virginia business entities, whether corporations, limited liability companies or other forms (collectively referred to as “business entities”).

Virginia businesses ask what the difference is between termination and dissolution of a business.   

Termination occurs when a business entity ceases to exist legally.  Dissolution involves the winding up the affairs of the  business entity, i.e., paying off debts or any business obligations of the entity, liquidating any assets, accounts of the business entity and distributing any cash to the owners. If the entity has debt, creditors that will not be paid must be notified to give the creditors opportunity to assert a claim against the business entity. Only once the affairs of the business entity have been wound up, can the entity be formally terminated by filing of Articles of Termination/Cancellation with the State Corporation Commission (SCC) of the Commonwealth.  Prior to the filing of the Articles of Termination, any taxes owed the Commonwealth or required fees and/or penalties which may be owed to the VA SCC must first be paid. Often a business does not go through the formal process of termination/cancellation but rather the VA SCC automatically terminates the entity three (3) months after the due date for the entity’s annual fee passes, absent payment. The process of formally dissolving an entity is more difficult if the entity has debt.

There are advantages to proceeding through the formal process of termination. We recommend that clients seek experienced business and corporate legal counsel before proceeding through the process of winding up a business. Reston Law business and corporate attorneys stand ready to provide clients guidance. 

Please note this is not legal advice and kindly review our disclaimer, below. 

For further questions, please contact Peter Fish, or Kevin Learned.