Closing your business in a lawful way
To close down a business includes a lot more than just locking the doors of your branch offices or stores. If you opt to just walk away, you're likely to be subjected to lawsuits, a bad reputation and needless fees. Based on the advice from your business attorney, here are six key steps to help any business owner close shop in the right, legal way.
Collect all outstanding debts owed to your company
For any unpaid accounts receivables, you will have to employ an insistent collections strategy. First, make collection efforts before you let the public know you're closing shop or else your debtors might assume they don't need to pay up. For old debts, offer bargains for swift payment. Rather than just dispatching collection letters to your debtors, which may be easily disregarded, call them personally and request for payment.
Notify your customers and fulfill all outstanding tasks
For large businesses, you can release a press statement, and for small businesses, just publish an announcement in the dailies informing your customers that you're soon closing down.
Besides notifying your customers, complete all outstanding tasks, and if you can't complete them, reimburse the money initially funded for those projects so far. In case you have binding agreements with customers, you must either honour them or discuss a premature contract termination.
Sell your business inventory
Now is the right time to sell all your business products and assets. The trick is to discount the products so that you can attract many buyers. At the moment, there are several online sites that you can sell your excess inventory to.
Inform creditors and settle due debts
Tell your creditors just prior to closing down, and request for a closing bill. Additionally, publish a statement in the dailies in order to reach all your creditors. Your creditors are supposed to submit a claim against your business for outstanding debts within a given time frame, based on your state's law of limitations.
Inform and pay your employees
Good judgement will be needed when informing your personnel about the looming shut down. You can choose to wait and notify them at the final moment to stop them from quitting or inform them early enough so they may begin looking for another job. Lastly, issue final pay checks to your employees.
File your final tax returns
You will need to submit your final annual proceeds. What's more, you must also submit your final employment duty incomes if you have workers, along with final state tax deposits of these monies. Indicate 'final' across the upper section of the tax forms and find out from the state authorities about how your tax account can be closed.