The Final Farewell: Business Responsibilities, Part II
When you close up shop, in addition to your professional responsibilities as a lawyer, you also have business responsibilities as the owner of a professional services firm. The last article covered some of the monetary-related steps that you will need to take. This article is a continuation of the discussion about the monetary-related steps that you will need to take to close up shop. Stay tuned for more articles about other responsibilities of a business owner when the time has come to leave the practice.
Determine Tax Requirements
Learn about the tax rules and requirements involved in closing your business. Talk with your accountant about the specific requirements for filing state and federal tax returns.
Review Insurance Policies
Analyze your insurance policies—including malpractice, general liability, disability, and life insurance—to find out when coverage will end. You also want to understand their various notification requirements so that you can let each carrier know when to cancel the policy or which policies to change because your circumstances have changed.
To protect your retirement assets, you should also consider an insurance policy called an “extended reporting period endorsement,” or “tail” policy. This policy covers any claims brought against you after you retire from practice for errors, omissions, and acts that happened prior to your retirement.
Consider Dissolution of Entity
If your business form is other than a sole proprietorship, assess the consequences of dissolving your organizational entity, including the liability and tax issues. If appropriate and consistent with protecting your family, dissolve the entity. Determine whether your state has any special filings that you must meet, with the secretary of state or other officials, regarding the dissolution of a business entity. Also, think about whether it might be more appropriate or advantageous for you to maintain your business entity for liability or tax-filing purposes.
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