Saying Goodbye To Your Business
There are many, many guides on how to start a business. How to sustain your business and how to grow your business. And we should be happy that we have access to all of that information that helps us with our business endeavors. However, sometimes we are ready for a new challenge. If you have been running your current business for some time, and are prepared to move on to something new and exciting then this guide can help you understand your next steps.
Not all business closures are due to sad or upsetting reasons - but some are. If you have been trading at a loss for some time, or have had a personal change in circumstance, it is important to know that there is no shame in closing a business. Actually, it can be one of the most healthy things you do for yourself.
Giving yourself the space to say goodbye to something that you have to spend many hours taking care of, growing from a tiny idea, and in a way has become part of you can be difficult.
But, when handled in the right way, and following this simple guide, you can give both yourself and your business closure.
It is important that you consider all of your options before moving forward with closing the business. If you are making a decision to close your business because you have a difficult client, or things aren’t in the black right now, this might not be the right thing to do. It may be that you would benefit from taking some time away from the office and taking stock of what you are doing. Look at what is and isn’t working. There are some red flags that typically mean that you should look to close your business:
Continuous struggling to make enough income to live for more than a few months
You have been advised to file for bankruptcy (see here how to file for bankruptcy)
You have been unable to cover the cost of your stock or have too much stock you are unable to sell
You simply do not enjoy the work anymore.
Here is a podcast that might help you make your final decisions: Should I Quit My Business?
Smaller businesses or freelancers usually have many fewer steps to follow. In some cases, they are simply required to stop working and give the correct paperwork to the entity that registers and dissolves/closes businesses. If you have a board or are in a partnership, you will need to seek the permission of all involved to make a closure.
You’ll need to work with stakeholders and partners to develop an exit strategy that is fair for all.
When looking at your business's overall closer strategy, seeking help from your bank manager, qualified tax professionals, your accountant, and lawyers will mean that everything is closed in the correct way.
Remember that the more detailed the plan, the more likely the business will be closed successfully without any loose ends.
These are often some of the most difficult conversations to have. You will need to have a clear idea of when you will take to your employees. If you tell them too close the closing date, this can look like a calculated bad-faith move. You are leaving them little time to find a new position. If you tell them too early, then you risk losing them before you had intended to cease trading.
If you need to sell some of your assets in order to pay bills, your staff will notice pretty quickly. You are forcing your hand into those conversations if you sell assets without a discussion first.
Consider the relationship that you have with your employees; this can be a determining factor in how you should handle the situation.
In most cases, you will need to ensure that your staff has their final pay. Not only that, but they are likely going to require any out-of-pocket expenses that they have incurred if you have business assets that your staff use like mobile phones, laptops, tablets, cars, and uniforms, you’ll need to collect these too. (these can usually be sold if the business owns them)
Need help? Read: How To Have Difficult Conversations With People At Work
Collect Outstanding Accounts Receivables
If you have any outstanding accounts receivables, you will need to employ an aggressive collection strategy that fits the business closure timeline. Once your business’s doors close for good, it becomes impossible to collect any of these outstanding accounts. Some businesses that catch wind of your closure might be more reluctant to pay and may lengthen the process.
Once the business is closed, you have no legal standing to collect these outstanding amounts.
As you are preparing to close, outstanding accounts can give you more cash on hand. Make your collection attempts long before any announcements of your closure are made. Otherwise, both customers and clients might feel like they do not have to pay you at all. Stalling until your doors close.
Rather than send collection letters, you can try to call the customers individually or visit them and ask for payment in person. These methods are more likely to see you get paid on time.
For balances, you are unable to collect, consider selling them to a factoring agency. A factoring agency will purchase your unpaid invoices for a discounted rate; you will, of course, not get the total amount that the outstanding balances were worth.
Sell All Assets
Often when a company is closing, there will be some excess inventory. Now is the ideal time to start reducing the prices and selling the stock off quickly. You are unlikely to make back what you purchased the stock for; however, the cash can be put towards any debts should you have them. If you are trading at a deep loss, it is often a good idea to speak to liquidators.
You can also sell the inventory on Amazon, eBay, and Craigslist.
Final Articles of Dissolution
After taking all the other measures, you will have some final figures you can work with. Those figures will be used to file your articles of dissolution. You will be required to submit articles for every state in which you are registered to conduct business.
The paperwork for each state will vary, as will it country to country. However, it does tend to be pretty straightforward if you already have all of the information that you need. There are also occasions where you can send and e-file rather than a hardcopy. Though, it would be best if you always kept a hardcopy for yourself.
There will be paperwork from other business accounts that will need to be arranged. Licenses, your business name, memberships, governing bodies, professional bodies, credit lines, and any subscriptions will all need to be wrapped up properly.
It is important that you carefully time when you apply for these end of contracts and submit the paperwork. Make sure that you have paid everything you are required to pay, and collected anything owed.
If you cancel them too early, you might find you have a few days or even weeks without power or the ability to pay for anything with your business bank account.
Final Payroll Forms and Taxes
Once you have said goodbye to your employees and they have been paid for the last time, you’re going to need to file the correct state and federal employment forms. Your business taxes should be done according to the regular schedule, and if you have any doubts about how to handle those, then speak to a tax professional.
Distribution of Money and Assets
After you have followed the rest of the guide, there are very few things left for you to do. It is important that everyone who is owed money gets paid. And that all of your taxes and costs are covered too.
This will stop you from having a debt issue or potential tax issue at a later date. When closing a business, it can feel like you want to hide from responsibilities and ignore business-related matters. But these last few things will mean that you have correctly closed your business and that no one is left wanting.
While almost all business owners can quickly wind up their businesses, and with minimal effort, there can be some minor complications and steps to go through. If you do happen to have heavy debt or creditors that won’t settle for less than what they are owed, bankruptcy is often the best course of action.
No matter how or why you are closing your current business’s doors, there is still a whole world of great opportunities that are waiting to be discovered. The initial closing of a business can be a very emotional thing. And for a short period, it is better to relax for a while than jump into a new venture.
If you are ready to start exploring all of your new options, here are 25 business ideas that have little to no start-up costs!