You should sell only the assets of your business and not the entity, i.e. the corporation stock or LLC membership itself. The buyer should form a new corporation and if possible, change the name of the business. If the name is XXXXX XXXXX be changed, then the buyer should file a "doing business as" form with the county recorder where the business is located. Also, the buyer should file for new EIN and state tax numbers for the business.
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Hello Mr. Law,
Thank you for your reply. I am not selling the business. I am stepping down as the owner and being replaced by someone yet to be announced. Before and after I step down, what are the legal steps to make sure all my ties and responsibilities to the company have been completely severed and that I am in no way liable for any actions the company may take in the future?
How do I check on a county, state and federal level that my name is completely "off the books"....???
Thank you for your advice,
It is an LTD.
LTD (meaning "Limited") is a designation for a corporation. Lets assume that you own all of the stock, or at least majority of the stock. As the shareholder of the corporation, you are not personally liable for its debts.In order to turn the business over to others,you will have to transfer your stock in the corporation to them. Once that is done, you can never be held personally liable for corporation obligations. I would add that in addition to transferring your stock, you should also resign as an officer and director. The people to whom you turn it over become the owners and they also have immunity from personal liability as long as they maintain a correctly operated corporation. You should have a local business attorney handle the actual preparation of the necessary minutes of meetings and transfer documents which will become permanent records of the corporation.
Are you a local business attorney?? If not, should I follow up with another lawyer on this website....??? I would like to know what transfer documentation will be necessary.
Thank you again,
Ralph: If you will provide more details about what is actually happening and your relationship to the corporation (i.e.are there other shareholders, officer and directors) I might be able to give you general ideas on documentation; however, we cannot substitute for actual legal advice from a local attorney who is personally familiar with what is going on.
There are no officers or directors. On the tax records my name is XXXXX XXXXX having 100% shares of the company. I have requested the parent company to replace me. My main concern is to make sure the company transfer documentation is complete and legitimate.
What do you mean by parent company? Are you a franchisee? If so, I doubt they will want to take over the corporation because they would be taking on its' liabilities - known and unknown. The problem of liabilities cuts both ways.
The company is super small and specializes in one service to one customer. Basically, our one customer as invested, set up and controls my company. My company, small as it is, has grown and is doing well.
I am moving on to another job and worried about the new owner.
Ralph: You have provided so few facts about your transaction, I can tell you that the only way to absolutely protect yourself 100% is to transfer just the assets of your business to whoever is taking it over, whatever those are: patents, software, machinery, information files, equipment, building, to the acquiring company. Then formally dissolve your corporation with the CA Secretary of State's office. File final income taxes for the corporation both state and federal and you can rest easily about anything the acquiring company does afterward.
I hope this information is helpful and that you will enter a positive rating. I thank you for submitting your question to Pearl-Just Answer. We appreciate your business. If you need clarification or additional information, please send me a Reply and I will be happy to explain further. Please consult a local attorney to verify the accuracy of this information according to your state's laws.Ralph:
Thank you for all your help.
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