You are neither the first nor the last person who is closing down his or her business. It’s not an easy decision to make, but sometimes it’s just the only decision you really can make. It’s probably for the best for everyone involved, and it gives you a great option and foundation from which you can build more later on, and to improve your work and your success.
Now, closing down a business properly is not easy. IT has its own order, its own system, and you need to approach it seriously. Just like starting a business is problematic, so too is closing one. So, read on if you want to know exactly how to dissolve your corporation.
Admit your mistakes and reflect
First things first – admit you have made a mistake. Even if the market is to blame, and there is no shame or ego in admitting that, there must have been things you could have done, ways you could have prepared. Perhaps saving up more money, having better contingencies in place.
Note that this isn’t supposed to serve as some sort of self-flagellation exercise, or basically torturing and tormenting yourself with what could have or could have not been. Rather, it’s more about learning from your mistakes.
Reflect on what has happened, see what you can do differently in the future. This has been an expensive learning opportunity, so make the most out of it.
What’s your exit strategy?
Well, things are over, but just because your ship is sinking doesn’t mean you have to sink with it. Thinking of an exit strategy is a smart and viable way to keep yourself afloat after all of this is over.
Now, you have several options. One of these is to get as much money as you can from your business. There are legal and ethical ways to do this, in spite of what you may have heard. We advise you to give it a shot and consult a lawyer on how to get the most out of this business, without breaking any laws.
Maybe you need to execute a voluntary liquidation with the assistance of attorneys and advisors. Call it quits, pay off debt, pay off your shareholders, and get onto your next chapter.
Finally, bankruptcy is a dirty word to most, but it doesn’t have to be that bad. The court will simply sell your business assets, which will pay off lenders and any outstanding debt and obligations. Getting a good attorney can make this process much less painful.
Notify your employees properly
Notify your employees. It’s a sign of being a decent person, a good boss. As soon as possible, tell them that you are closing your company. This gives them enough time to find new work and to prepare properly. We also suggest you protect some of your products and appliances in case you have less than morally conscious disgruntled employees.
Remember to also adhere to any and all local laws. For example, you might be obligated to inform your employees with proper notice, in writing, if you have 100 employees or more.
Get in touch with customers and creditors
You need to notify your customers and creditors. Inform them of any and all final dates for debt repayment, and get things going smoothly. You can even recommend a friend or colleague for further services. The same goes for your creditors. This is also a good opportunity to get some money you are owed and to minimize your debts and loans.
Liquidate your assets
Take a look at all your inventories. Observe your assets, your finished goods, and your raw materials. If needed, take photographs of your items, write down serial numbers and short descriptions. Don’t forget about your intangible assets as well, things like licenses, permits, patents, trademarks, and other potential customer’s lists. IF needed, talk to an intellectual property lawyer and see what kind of advice they can offer.
Next, prepare these assets for a sail. Repair, clean, and in general spruce up all of the things you are willing to auction off and sell, and then get the most out of this work. Check for warranties and repair records, and even donate some things you can sell so that you can get certain tax deductions.
See what kinds of sale options you can get for your assets. Maybe you can get some negotiated sales system, or perhaps consignment sales, internet sales, public auctions, retail sales….
Resolve your obligations
There is always more paperwork to be done, something that is clearly seen through your financial obligations. Namely, at the moment you are filing income tax returns for the year in which your company has been dissolved, make a note on the form that this is the final return.
Remember to also satisfy all tax responsibility when it comes to employee income. Contact both federal and local tax agencies, and that you will be handling your paperwork diffidently (like not filing employer quarterly tax forms…).
If you have any debts to lenders and creators, you should settle them as soon as possible. File for bankruptcy if you believe you cannot pay back these debts completely. Contact the IRS if needed, settle all your other debts, close all business bank accounts, and cancel your credit cards.
Dissolve and move on
Once you are ready, it’s time to completely dissolve. Contact your lawyers or your accountants, fill out the proper forms, and shut things down. Furthermore, don’t forget to cancel all permits and licenses you have, as well as business names, subscriptions, and everything else tied directly to your business.
Note that you will have to maintain tax and employment records for another five years form the moment the business is closed. However, besides this annoying fact, you are pretty much in the clear and can count on moving on, in the clear, with a clean conscience.
And so an end to a big chapter in your life has come. But, don’t be sad, rather, embrace what has happened, and learn from your mistakes. Maybe it was your fault, or maybe it happened because of the market. Whatever issue caused this problem, know that by following this guide, you can step down peacefully, practically, and with dignity.