Are you a small business owner who is looking to close your business and move on to another venture? Or are you a new entrepreneur who is trying to prepare an exit strategy from early on? Whatever the case might be, it is not easy to think about dissolving your company. However, as experts on small business loans in Atlanta, we firmly believe that entrepreneurs need to have knowledge of all different aspects of their business, including the closing process. It is not just about closing the door, walking away, and never looking back – there are many responsibilities that come with closing down a business.
Resources to Consider Before Deciding to Close the Business
Making the wrenching decision of whether to close your business can be tough. Therefore, it is important that you take a good, honest look at the state of the company before putting an end to it. Bear in mind that there are a lot of resources out there that can help keep businesses like yours open. Whether your company is going through a tough time or not, you can count on the organizations listed below for support:
- Your local Office of Economic Development
- Your local Chamber of Commerce
- Your local Service Corps of Retired Executives (SCORE) chapter
- Your local Women’ Business Center
- The Small Business Administration (SBA)
If capital is your issue, our experts at First Liberty can offer you a complimentary ten-minute evaluation to see if you are a good fit for us and potentially help you get the funding that you need for the business. We are big fans of entrepreneurs and we work hard not only to keep your door open but to see you thrive.
Steps to Closing Your Business
If it is time to close your business, follow the steps below.
Step 1: Be on the Same Page about Closing the Business
If you are a sole proprietor, there should be no issue if you decide to close up shop. However, if there are partners and co-owners involved, you want to make sure that everybody is on the same page about the decision to close down the company and how the process will take place. Make sure to have the agreement in writing in case of disputes in the future.
Step 2: File Dissolution Documents
An important part of the business closing process is notifying the state of your intention dissolving your business. This is done by filing articles of dissolution with the state in which your business is registered. Depends on the state, the filing procedure and fees may vary. Failure to legally dissolve your business with the state means that you will remain liable to taxes and filings.
Step 3: Resolve Financial Obligation
You are obligated to pay your taxes before closing your business, including employment-related taxes, sales taxes, and income taxes. If you plan to sell some business assets before closing, make sure to file Form 4797 to the IRS. In addition, don’t forget to cancel your Employer Identification Number (EIN). To make sure that all bases are covered, follow this IRS checklist of typical tax actions before closing down a business.
Once you have taken care of your taxes, it is time to notify your creditors of your decision to close. Whether a debt is paid off in full or settled for less than you owe, the agreement must be in writing so that everything is legally binding.
Step 4: Take care of Administrative Tasks
Cancel Your Registrations and Permits. Contact your local government to cancel your permits and registrations. Also, make sure to deregister your DBA name.
Pay Your Employees. Notify your employees of the business closing and give them their final paychecks. Different states may have different regulations on unpaid vacation days and bonuses for employees before the business is closed, so check to make sure that you comply with the state law.
Close Accounts. Contact your bank(s) to close all accounts associated with the business and cancel your business credit cards.
First Liberty – Your Trusted Source for Small Business Loans in Atlanta
Saying goodbye to a venture that you have invested so much time and effort in is probably one of the hardest things that an entrepreneur has to face. Therefore, we highly encourage all business owners to exhaust all the options and resources available before considering closing down their business. At First Liberty, we work tirelessly with entrepreneurs to come up with creative financial solutions and lead their companies through tough times. Count on us to help you secure the funding that you need!