Sepahi Law Group, APC

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"I recommend Sage for whoever is in need of a knowledgeable and effective attorney. I ran into some issues with my partners when trying to dissolve a corporation. I retained Sage to help me through the process and I couldn't be happier with the results. Sage communicated very effectively with the other side and protected my assets completely in the process. His rates are extremely fair for the results you will get. You won't regret having Sage in your corner. "

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Do You Need to Dissolve a Corporation That Never Did Any Business?

January 15, 2015 by Sage Sepahi

When you file paperwork for your business to become a California corporation, your company gets its own identity. The corporation exists as an independent “person” under the law. The corporation also has ongoing obligations that it must fulfill.  If the company does not do all of the things required of it each year, you could find yourself responsible for the resultant fees under certain circumstances.dissolve corporation

If you decide that you do not wish to do business after you have incorporated, you still need to take the formal legal steps to dissolve the business.  Although many people do not realize it is necessary to dissolve a corporation that never did any business, the reality is that there are serious consequences for just abandoning the company. A San Diego business law attorney can assist with the process of formally dissolving your corporation so the business ceases to exist and has no further legal duties.

Why You Need to Dissolve a Corporation that Never Did Any Business

It is necessary to dissolve a corporation that never did any business because every corporation in the state of California has ongoing duties. These obligations are not triggered by the company providing products or services or opening its doors to customers. Instead, the obligations for the corporate entity are created as soon as the corporate forms are filed and accepted by the state.

Under California law, every corporation must comply with reporting requirements and must pay a franchise tax for as long as it continues to exist.  If you ignore the franchise tax requirements, the business will get repeated notices and eventually it could be suspended. However, even if the business does end up being suspended, the company will still owe the franchise tax to the state.

Corporate owners and directors generally are not personally liable for debts of the business, including the franchise tax. However, if you took out any of the assets of the business, including any money or property, then you might be required to pay the corporation back so that the franchise taxes and other costs could be paid.  You could be responsible for compensating the business up to the value of the assets withdrawn.

It is not worth incurring taxes, fees and other costs associated with keeping open a corporation that never did business and that you do not plan to do business with in the future. Instead, you should go through the formal process of dissolving the company.  It is not that complicated to dissolve a corporation that never did any business provided that the organization has no outstanding debts (like unpaid franchise taxes). The sooner you act to end the company permanently by filing appropriate paperwork, the less complicated the process of dissolving the corporation will be, and the less chance you take of having legal problems later.

An experienced San Diego business lawyer at Sepahi Law Group, APC can help you to dissolve your business. Call today to schedule a consultation and get the process started so you can move on without the abandoned corporation hanging over your head.

About Sage Sepahi

Sage Sepahi provides business litigation, class action litigation, employment litigation, real estate litigation, civil right litigation, commercial litigation, corporate formation, business dissolution, and arbitration/mediation services to residents of San Diego city and county, La Jolla, and Del Mar.

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Testimonials

  • Business Client

    I appreciate the friendliness and the prompt response I would receive from him. I would definitely recommend Mr. Sepahi he is very knowledgeable in what he does and I wouldn't hesitate to use his service again. I had a really good experience working with him.

  • Daniel

    I am also an attorney in San Diego. I needed a business law attorney to assist me with a very complex matter. As I have been an attorney in family law for 9 years, I did not even know where to start in looking for a business attorney. I was informed about Sage Sepahi who had an excellent representation in Northern California. I was a bit nervous about using someone new to San Diego, but I couldn't have been happier. I got a six figure settlement and am very pleased. He knows business law like the back of his hand and was great. I would never use anybody else and find he was extremely professional and always returned calls and emails.

  • Steve

    I hired Sage a couple years ago to step into a case that my previous lawyers had managed to screw up. From the moment Sage took over my case things changed. He understood the complex issues I was dealing with created an effective strategy that allowed us to prevail on every significant aspect of the case. I hired Sage during a very stressful time in my life and it was one of the best decisions I ever made. Being a business owner for the past 25 years, I have dealt with many attorneys who view you as a quick and easy way to make a buck. Sage is the exact opposite of this- highly ethical and trustworthy. I can't thank Sage enough and he will be the first person I call when another issue presents itself.

  • BT

    Sage has represented me in a variety of legal matters including business disputes, transactional matters and employee conflicts. Sage is a great communicator and his ability to prevent legal problems before they arise. He is among the best attorneys I have worked with. I highly recommend Sage.

  • Matthew

    Attorney Sage Sepahi is simply the best! Sage came highly recommended by one of my clients who was in a similar situation as I was with his business partners. He took on a tough case for me and I was very happy with the results. He goes out of his way to ensure you are kept up-to-date on the status of your case to the end. I would definitely recommend Sage if you are looking for a honest, efficient and knowledgeable attorney. Thank you Sage!

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P.O. Box 2608
Del Mar, CA 92014
+1 858. 465. 9206

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