How to Start a New Business After Dissolving a Corporation

By Elizabeth Rayne

One of the benefits of running a business as a corporation is that the corporation is an independent entity that conducts business in its own name. Under the law, it is considered a legal person separate from the owners and shareholders. Once it is dissolved, its debts and obligations go to the grave with it. A business owner is free to start a new business that is legally unrelated to the old business.


After one business has closed, you may form a new business by filing formation documents with the state. The new business can use any legal structure that the state allows, such as a limited liability company, corporation, or sole proprietorship. Not all business types require registration with the state. Often, partnerships and sole proprietorships may be formed without state registration. Even if you choose the same or a variation of the old corporation's name, the new business is legally unrelated to the old corporation.


If you properly dissolved your corporation, you paid your business debts, and the remaining assets were distributed to the shareholders. If you were a shareholder, you would have received your portion of the distributions. When starting your new business, you may use the funds you received from the old corporation for start up expenses and capitalization. Because you recently closed a business, you should have a good idea as to how much money you will need to get your business going. If you do not have enough money in your personal account, you may consider applying for loans.

Ready to incorporate your business? Get Started Now


If the corporation was properly dissolved, you closed all of the business accounts and will now need to open new accounts. As a new business, you may not use any of the old corporation's accounts. You will set up new bank accounts for the business, and apply for a new Employer Identification Number with the Internal Revenue Service. Additionally, if required in the state where the new business is registered, you must apply for a new state tax ID.


One ramification of closing an old corporation and starting a new one is establishing credit for the new business. You may have built up a respectable credit score for the old corporation, but in establishing credit for the new business, lenders and creditors will look to the owner's personal history. The failure of a prior business, particularly if you personally guaranteed any business loans for the closed corporation, may impact the ability of the new business to get credit. However, having collateral, and the ability to invest your own money into the business, will improve your chances of getting credit for the new business.

Ready to incorporate your business? Get Started Now
How to Change the State of Incorporation


Related articles

How to Dissolve a Corporation & Form a New One

If you are interested in forming a new corporation, you do not necessarily have to dissolve your existing corporation. Even if you have the same shareholders and similar mission, you can have two corporations operating independently. The process for dissolving and incorporating will vary depending on where the corporation is located, as each state has unique requirements. Generally speaking, you must notify the state and pay remaining debts to dissolve a corporation, and a new corporation is formed by filing articles of incorporation with the state.

How to Go From a Sole Proprietor to a Corporation in Nevada

If you run a business in Nevada as a sole proprietor, you weren't required to file any formation documents with the state to start or operate the business. However, if you want to convert from a sole proprietorship to a corporation, you must file articles of incorporation with the Nevada Secretary of State. After your corporate entity is approved, you'll likely be required to file other documents with state and federal agencies.

Can I Name a Company Without Registering for an LLC?

The limited liability company, or LLC, has become a popular form of business organization in recent years due to its flexibility, simplicity and provision of limited liability for members. While many entrepreneurs may choose to organize their new enterprises as LLCs, it is not necessary to do this to name and register a new company.

LLCs, Corporations, Patents, Attorney Help

Related articles

How to Become an LLC Business

The choice of business structure is one of the first and most important business decisions a new owner can make, but ...

How to Relocate a Non-Profit to Another State

A nonprofit organization is a type of business entity that operates for charitable or educational purposes and does not ...

How to Re-Open a Dissolved Company

In theory, corporations can exist forever, but they can also go out of business or be dissolved for other reasons. For ...

What Happens to Assets in a Sole Proprietorship if it Changes to a Corporation?

A sole proprietorship is a simple way of running a business under the name and personal liability of the owner. The ...

Browse by category
Ready to Begin? GET STARTED