What is the difference between dissolving and liquidating a company


If the entity is a corporation, the state may require the authorized officer or officers to file a notice of intent to dissolve reflecting the approval of all of the required percentage of shareholders or members to the dissolution.

State law may further require that all creditors be given notice of the dissolution.

Most states allow a reasonable amount of time during which the entity may convey assets or wind up the business.

Generally individual shareholders prefer their distributions as capital as the capital gains tax treatments are more favourable and in certain circumstances Entrepreneurs’ Relief is available providing additional savings.

So if shareholders now wish to have their hard earned cash as a capital distribution they have to go through a Members Voluntary Liquidation (MVL).

This will be accomplished by deeds or bills of sale signed by the duly authorized signatories for the corporation or LLC conveying property to each individual member or shareholder.

All debts of the corporation or LLC should be paid prior to distributing the assets in this manner.

Advice from an accountant is essential at this stage.