Due to their low number, shareholders often assume management and direction of the company. This consolidation of responsibilities can lead to specialized legal issues. While the corporate structure offers protection from liability in most instances, some actions or decisions can expose directors and officers to legal risks even if made in the course of business. Dissolution Dissolution of a business may happen for a variety of reasons including management deadlock and unprofitability. Since most business organizations exist in legally-mandated forms, they must use statutory procedures to close their doors.
State laws help protect shareholders and creditors of dissolving companies.
Businesses must plan for profitability, tax consequences, employment issues, and other concerns. Business forms can change with commercial needs and realities, and savvy businesspeople will keep an open eye for changing risks and opportunities. Limited Liability Companies Limited liability companies allow their owners to enjoy the tax status of a partnership and the limited liability of a corporation. This relatively new business form is gaining in popularity nationwide, with special state laws addressing formation and operational issues. Nonprofit corporations exist under state law, but must apply to the Internal Revenue Service for tax-exempt status.