What does 'business dissolution' mean?

Business dissolution refers to the formal process through which a business entity is legally ceased to exist. This involves completing legal requirements that indicate the business will no longer conduct operations or hold any assets. The dissolution can occur voluntarily by the owners or partners deciding to close the business or it can be initiated through court proceedings.

Understanding this process is vital, as it involves various steps, such as settling debts, distributing any remaining assets after liabilities are addressed, and notifying appropriate governmental agencies. The other options do not accurately define business dissolution. Expanding business operations refers to growth activities, creating a new business entity involves establishing a fresh legal structure, and merging businesses pertains to combining existing entities into one. Each of these processes plays a different role in the lifecycle of businesses, but they do not denote the termination of a business's existence as dissolution does.