Having a plan for closing a business is almost as important as having a plan for starting a business. A well thought-out course of action will save you time, money, and aggravation.
The following information will provide you with some of the procedures for closing a business. It is always a good idea to consult with your CPA and attorney before making any final decisions.
Collect All Receivables
Collect all of your receivables before the closing of your business. Start this as soon possible as collecting receivables is almost always a slow process and will usually be more difficult after you have closed your business.
Carry Out All Obligations
Inform your customers or clients and fulfill any obligations you have with them. This includes but not limited to: completing any work (warranty or otherwise), returning deposits or coupons for goods and services that have not been delivered or performed.
Besides the obvious legal consequences, satisfying your obligations to your customers, employees and suppliers is always an excellent idea since this will reveal your good character and professionalism a business owner. Should you decide to start up another business this will have a positive impact on your image and should make any future business relationships go much smoother.
Pay Any Outstanding Bills
The one thing you do not want to hear after closing your business is that you still unpaid bills. Make sure all of your bills and financial obligations have been paid. Consider requesting letters from your suppliers confirming they have been paid in full.
Close All Business Accounts
Close out all of your business checking accounts, credit cards and any lines of credit. Also, don’t forget the obvious accounts for heating, electricity, phones, cable and any arrangements you have with your landlord as well as your lease.
Announce That Your Business Is Closing
You many want to publicize in the media that your business is closing. It’s up to you to determine which media outlets will best. Announcing the closing of your business could help guard you from liability and make sure you’re not held responsible for mistakes made by another company with a similar name.
Call The Secretary Of States Office
Be sure you call the secretary of states office to get a comprehensive list of your obligations when closing a business in your state.
Filing Your Final Tax Return
You will need to file your annual tax return for the year that you close out your business. If you have employees you will be required to file employment tax returns and pay final tax deposits due for these returns.
Normally you are required to file a return after disposing of business property. You should consult with your CPA for advice and assistance concerning the filing of any final returns due and other obligations you may have. For legal questions consult with an attorney in your state.