Ending a business is not always a bad thing. Sometimes it may mean the start of retirement or the beginning of a new business venture. Whether your business is a sole proprietorship, a partnership or a corporation it is always good to make a plan for your business closing. In some cases you may choose to sell the business but in other cases business closure is necessary. Failed businesses typically are not marketable and are closed.
When closing a business, it is important to get as much equity out of the business as possible. One way to do this is through the liquidation of business assets and inventory. While going out of business, keep the following in mind:
1. Time the closing of your business well.
2. Plan your exit strategy.
3. Outline your steps to closing a business.
Decide on a business closingIf you are a sole proprietor, the decision to close your business is yours alone. However, if your business is a corporation, limited liability company (LLC) or partnership, a vote must be taken and the decision to close must be agreed upon by whatever percentage is required by your state's business statutes. If your business is a corporation or a LLC it must be officially dissolved so you are no longer responsible for tax filings.
Do the paperwork for ending a businessCancel all licenses and permits that your business has with your state and local government. If you have been using a business name, file an abandonment of your business name with your county clerk's office. After your employees and customers have been notified of your business closure, publish the abandonment of your business name in your local newspaper so your community knows that any further dealings they do with a business under that name is no longer yours. File all necessary forms with the IRS.
Internal Revenue Service provides a checklist of forms for going out of business. The IRS TaxMap provides answers to questions. Use an attorney that specializes in business closing if you need help or advice.
Get help with closing a business basicsThere are resources available for the small business owner to make the transition out of business an easier one. Turn to other business owners, small business owner organizations, and use resources available on the Internet to make sure you do not overlook anything while closing your business.
U.S. Small Business Administration (SBA) offers assistance and information on how to liquidate and close a small business. FindLaw provides a checklist to keep you organized while going out of business.
- If your business has employees, notify them of your closing, before you notify customers or make any public announcements. Let them know their last date of employment and when they will receive their last paycheck. Your state may also require you pay them the value or accrued unused vacation time.
- Consider business closure implications for your customers. Settle all accounts with your customers and collect on any outstanding debt, before telling your customers that your business is closing. Notify your customers of your business closing and fulfill any contractual obligations to them or refund their money, before going out of business. Invite them to a "Going Out of Business Sale."