- Cole Gorman
How do I close my business?
You may have read nostalgic articles in the town press whenever a local business closes. They tell how the company “pulled down the shutters and closed its doors for the last time.” What they fail to mention is that there is much more to the process than this.
If you need to close your business, you need to follow a strict set of legal procedures. Otherwise, you could face further future costs.
Who do you need to tell when closing a business?
The business dissolution process involves informing specific people and entities. One of the most important is your employees. Make sure you do not leave them until last. Here are the others you need to tell:
Those with interest in the business: You need the permission of directors, shareholders and other owners to close.
The state: Once you have permission to close, you need to file an article of dissolution with the Secretary of State. You need to do this in the state where you registered the company.
Anybody who owes you money: You need customers with outstanding debts to pay you.
Those you owe money: If you have outstanding debts, you should liquidate your assets to help pay them.
Suppliers, vendors and customers: The newspaper article tells the general public you are closing. Consider a more personal approach for those you do business with on a regular basis. It creates a solid base for doing business with people again in another capacity.
Professional associations: You may have association memberships or business license fees that renew. Make sure you cancel these to avoid future charges.
The IRS: If you do not tell the Internal Revenue Service you are closing, they will continue to expect tax from you. It also updates them on the tax situation of people you employed.
Closing a business can be an emotional decision. Seek legal help to ensure the emotion of the situation does not cause you to overlook vital legal steps.