See also the section of this Guide entitled “Business Taxes – Income Tax Withholding – Withholding Tax Penalties and Interest”. The final report of income and expenses attributable to the business is included in the proprietor’s individual income tax return, which is filed at the usual time. No final return or early filing is required. Tax consequences may flow from the sale or other disposition of assets used in the business. Partnership. The partnership, because it is a more formal structure than a sole proprietorship, is more complex to terminate. RUPA identifies several ways in which dissolution may occur, but the partners may provide for continuation of the partnership even if an act of dissolution occurs. The consequences of causing the dissolution of a partnership also are specified in RUPA. The statute addresses the allocation and distribution of partnership property upon dissolution, liability of persons continuing the business, and other rights and liabilities of the partners. However, the statute does not address procedural matters such as filing final tax returns, notifying taxing authorities of the termination for employment tax purposes, notification of creditors and similar matters involved in winding up the affairs of the partnership. Assistance with these matters may be obtained from legal counsel. Tax consequences may apply to the disposition of partnership assets, and those tax consequences will flow through to the partners. The general partnership may file a Statement of Dissolution with the Secretary of State but generally otherwise need not file notice of dissolution or termination of the partnership with any governmental entity. The limited partnership must formally cancel the certificate of limited partnership and file the cancellation with the Secretary of State. A limited liability partnership will revert to a general partnership upon voluntarily terminating limited liability partnership status, which is done by filing a withdrawal or termination statement with the Secretary of State. Limited liability partnerships do not expire unless the partnership fails to file the annual registration, in which case the limited liability partnership status is terminated and the partnership reverts to general or limited partnership status. Note that the Revised Uniform Partnership Act (RUPA) also allows for mergers of partnerships which terminate all but the surviving partnership. Corporation. The corporation is the most complex business form to terminate. Formal dissolution procedures, both before and after the issuance of shares, are specified by statute, and include, for example, filing notice of intent to dissolve the corporation and articles of dissolution with the Secretary of State, notification of creditors, disposition of assets, and distribution of the proceeds to shareholders. Tax consequences will affect both the corporation and its shareholders. Because of the complexity of the statutory procedures and tax implications, professional legal and accounting advice is highly recommended. Corporations may end their separate existence by merging into another corporation or into a Limited Liability Company. Limited Liability Company. As is the case with partnerships, limited partnerships, and corporations, the procedures for dissolving a Limited Liability Company, both before and after accepting contributions, are spelled out in the governing legislation. Different procedures apply, depending on when the Limited Liability Company is dissolved and who dissolves it. The law specifies the notices to be given (e.g., to members and creditors), filings with the Secretary of State and procedures for winding up the business of the Limited Liability Company. Limited Liability Companies may end their separate existence by merging into another Limited Liability Company or into a corporation.
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