Closing a business is not an easy decision to make. If you’re a business owner, considering this might be your last option. It could be that you are left with no choice to continue your business, for instance when you don’t have enough funding to push through even with lesser revenue.
If you’re planning to close your business, know that it is more than just turning your back on everything and never looking back. You need to follow a set of steps in order to close your business the right way without worrying about legal disputes, tainted reputation, debts, and other problems later on. Here’s what you should do to close a business properly and still build a new path onwards after.
Plan the Exit Strategy
Unless you’re a sole proprietor, closing a business needs to be discussed by everyone that is involved in its ownership. It could be your business partner, a board of directors, and all the other owners. Plan and discuss a good exit strategy with them in a way that your business goes out smoothly. You may also want to seek advice from accountants, lawyers, bankers, and other business experts.
Inform the Employees
Telling your employees that the business is closing is not that easy since they will be the ones losing their job in the first place. However, it should still be done properly so they could help in completing tasks that are needed before closing. Aside from giving your employees their last paycheck, you also need to reimburse them when they had any out-of-pocket expenses and collect company property from them.
Settle Outstanding Receivables/Sell Assets
This could be one of the most challenging tasks you should do before closing since you have a limited time to do so. Hiring a debt collection service helps a lot since they will be the ones to handle solely this task. If you can’t collect all outstanding receivables on time, you may also opt to sell them instead to get back your investment.Aside from collecting receivables, you should also sell your excess inventory. The cash you earn with this can be used to settle your debts and even serve as a return for your capital.
File the Necessary Paperwork
Documents and paperwork are an essential part of every business. When you’re closing your business, you should first file an article of dissolution on all the places where your business is registered. Aside from that, you should also close out other accounts such as licenses, permits, registrations, business name and number. In case you plan to reopen your business, you may also opt to reactivate my ABN instead of getting a new one – and it’s still free of charge.
When you intend to close your business, you have to inform your customers as well because they were there when your business was growing. If you have a bigger business like a corporation, you could opt to issue a press release to send the information easier.
Closing a business can be a hard decision to make but once you know what to do, you can close it in the right and smooth way possible.