Whether your small business is no longer able to make ends meet or you’re simply ready to move on to a new venture, closing your company can be both a difficult decision and a lengthy process.
Small business owners need to take several steps to ensure they fulfill all the necessary legal requirements. The following tips in developing a plan for closing will help you avoid unnecessary fines and legal disputes, and maintain a good business reputation as you move on to your next endeavor.
Let your employees know first. Notifying your employees can be tough, but an open, communicative approach is often best. Give them plenty of warning so they can start looking for a new job and be honest about the reasons for your closure. Help them find new jobs if you can. By taking this kind and helpful approach, employees won’t lose their respect for you, and they will stay motivated as they finish up any remaining work.
Next, inform your customers. Open communication with your customers is just as important. Announcing liquidation sales will help you get rid of inventory, and allow clients to snag their favorite products or use up any gift cards they may have. It’s also important to inform customers of your decision and discuss how it affects any contracts that are in progress. You may be able to finish any incomplete work but if not, you’ll need to negotiate early termination and pay any cancellation fees or refunds. This is also the time to collect any outstanding receivables.
Comply with labor and employment laws, and file dissolution documents. If your small business is an LLC or corporation, you must legally dissolve it with any state you are registered in to put an end to taxing and filing requirements. Protect your reputation by promptly canceling any business permits, registrations, and licenses you no longer need. Close your business tax account, and keep good records.