MightyRecruiterThe dissolution, or end of the legal and business life of a company can occur for a number of reasons. Regardless of the precipitating factors, it can be a remarkably complicated process involving a number of steps, interactions with various agencies and officials on state and federal levels, and a ton of jargon along the way. There is already so much to do and to handle without making life more difficult with what can feel like a bombardment of new words and concepts just to end one enterprise so you can move on to the next. Consult this handy list of some common terms you may encounter when navigating the waters of your business dissolution.Administrative dissolution: when a corporation is dissolved forcibly by government officials, typically for legal transgressions such as not having a registered agent while operating, not delivering reports annually, and not satisfying tax obligations.
Articles of dissolution: documents filed with officials in the state(s) in which a company operates declaring the intent of the business to dissolve.
Certificate of fictitious name, trade name, or assumed name: approval from state officials certifying the registration of a name under which business will be conducted and that differs from the legal name of the owner(s) of the company.
Certificate of authority: document issued by state officials granting a foreign entity the right to operate within that state.
Complaint: the filing in a court of law outlining a grievance a party has with another and seeking redress for said grievance.
Dissolution: the cessation of a business enterprise’s existence as a legal entity.
Indemnity: protection from liability to certain parties for losses they may incur or may have incurred.
Involuntary dissolution: when the shareholders of a corporation were not the parties who initiated a dissolution of the business.
Limited liability company: a non-corporate legal construct that provides protection from certain liabilities to its owner(s) and establishes the company as distinct from its owner(s).
Liability insurance: insurance product specifically designed to shield businesses from liabilities incurred due to their business operations such as injuries and financial losses.
Liquidation: the conversion of assets into funds that could be used to satisfy debts and other liabilities.
Notice of intent to dissolve: announcement sent to authorities making them aware of your business’s plans to dissolve.
Partnership: a business arrangement in which two people or more agree to conduct operations for profit, sharing in the provision, funding and financing of skills, labor, and capital, and dividing the profits and losses between themselves in accordance with their agreement.
Partnership agreement: the document that lays out the terms and conditions under which a partnership will be operated, generally detailing percentages of ownership, responsibilities and rights.
Product liability lawsuit: a tort filed in a court of law alleging injuries caused by the use of a product rather than through the actions of an individual.
Settlement: an agreement between the parties involved in a lawsuit that stops legal action in exchange for both parties receiving financial or other concessions, often undertaken in bargaining to avoid embarrassment and/or expense at trial
Sole proprietorship: a business enterprise that is legally and financially indistinct from the individual who owns and operates it and who is personally liable for any damages or losses incurred in operating the company.
Trade name/assumed name: the name a company may use to operate under in lieu of using the real names of the owner(s) of the business.
Voluntary dissolution: when a partnership’s partners, a corporation’s shareholders or directors, or a limited liability company’s members initiate and/or approve the dissolution of the business enterprise.
Winding up: the process of selling a company’s assets, using the resulting funds to satisfy liabilities such as debts or outstanding legal settlements, then distributing what may remain to the members, principals, and/or parent organization of the company before final dissolution.
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