Say someone owned an LLC or an S-Corp and they ran their business for a few years and then decided to terminate the company and move on. Is there any way the company could still be sued or anything like that? Would the suer be able to actually collect any funds since the company is now defunct? This is just something I've always wondered.
No. This is why folks are sometimes advised to periodically shut down one entity and start doing business with a new one.
Ah ok. I always thought it would be messed up if a dead corporation could still get sued. So this is valid throughout the whole country and doesn't vary state to state or anything?
You should check with your state's Department of Revenue or Department of Corporations for the correct information. I have found SCORE -- Service Corps of Retired Executives -- to be a valuable resource for small business related information. Search for your local SCORE chapter to get the advice that you need. BTW, their services are free; their low cost seminars are excellent too.
LLC and S-Corps aren't shielded from IRS and DOJ even after they shut down. In most cases a C-Corp would be. As far as other creditors and legal action you would probably be safe, but nothing is 100% certain. If you didn't really run your corp/llc as a separate entity (mixing of funds being the most common mistake), or if you are talking about illegal or fradulent activity then a big company or anyone willing to pony up the money could come after the partners/directors individually even after the company no longer exists. If you are just talking about standard liability, then the partners/directors of an LLC/S-Corp are going to be pretty well insulated. It really depends on what type of legal action or creditor you're talking about.
So long as the corporation is in existence, and it hasn't done any of the many things that will let litigants "pierce the corporate" veil, they generally can't sue the individual officers or shareholders. If you go into bankruptcy, certain transactions with insiders can be unwound for a period of time. In some rare circumstances, if you are an officer of the company, you might have liability to third parties for things related to the corporation's activities. If you shut the corporation down, you need to check the law in the state of incorporation. If I recall correctly, some states require you designate an individual to be liable for any unpaid obligations. Successor liability will certainly be a state by state issue. Corporations are creatures of state law, and if you think you might actually have any exposure of any kind, you need to talk with a lawyer who knows the law of the state(s) where the corporation was chartered and has its place of business. For something this technical, you would be a blazing idiot to take advice off these forums from people who are not lawyers, and don't have the remotest idea about the actual legal issues involved (although that never seems to stop them from opining as if they knew the answer). This is not a seat-of-the-pants common sense kind of issue, but a fairly technical state corporations law issue. While I am a lawyer, I am not your lawyer, and this general observation is not advice to you. To get advice, you need to talk directly with a lawyer with expertise in this area, and who knows the specific facts applicable to your situation. We have no attorney client relationship. Repeat: I am not your lawyer, this is not legal advice in any way related to your or any individual's situation.