If you were unable to find a buyer for your business, you should consider liquidating it.Poor results, owner retirement, or the loss of a franchise arrangement are some of the reasons to close a business.It can be difficult to close a business and liquidating assets.You should talk to an attorney or certified public accountant about business closings.While the process of closing a business is very difficult, it is important to make sure you get the best value for your assets, pay your employees, and comply with state and federal laws.
Step 1: Discuss your issues with your lawyer and accountant.
Before taking any steps to close your business and liquidate your assets, you should speak with your lawyer and accountant and make a plan that follows federal and state law, which will provide you with the most value and pay off your debts.
Step 2: You should review your business's articles.
The closing plan of your business should be reviewed to make sure it is in line with your partnership agreements and shareholder requirements.
Step 3: All debts must be documented by the business.
Information and documentation about the debts of the business are needed.Small business loans, accounts payable, and other debt may be included.Determine if the debt is secured or not by going through it.If any of your loans are personally guaranteed, you are responsible for their repayment.
Step 4: You need to inventory your business's assets.
A detailed list of everything owned by the business can be created by going through all of their property, equipment, cash, accounts and other assets.Unpaid debt that you expect to collect, business bank accounts and deposits, and any rent that the business will collect before it closes should be on your list.List all physical property, including the actual building and land, if owned by the business, as well as any equipment, furniture, vehicles, and any other items that can be sold.List the security deposits and insurance premiums the business made to landlords.This list can be used to report the business's assets to the IRS.Intellectual assets, like patents, are included in a business's assets.These can be very valuable to your business.If you owe anything to your business, collect it.Before you announce the closing of the business, you should demand payment.Reducing the amount of money that you owe a debtor is a good idea.It might be easier to collect a partial payment and have some of the money repaid before the business closes.
Step 5: Hire an expert.
Once you have inventoried your assets, you should hire an expert to value them.There are ways to reduce the price of goods for damaged assets.To calculate the cost of selling all of the inventoried items, closely review the written appraisal report.The costs may include labor, rent, and liens.If the total appraisal value of your assets is less than the cost of selling all of them, you should ask your attorney what other options you have.
Step 6: Do you want to sell your assets?
There are many ways that you can sell your business assets.Depending on your inventory, consider which way will give you the greatest return and is convenient.If you want to purchase some or all of your assets, you need to identify those candidates who are most likely to be interested.If the assets are not specifically pledged to a creditor, inventory and accounts receivable can be sold at a discount for a lump sum.Ask your landlord if he or she wants to buy your inventory so that they can reuse the space.If you have items that are easy to move and a local retailer that specializes in your type of goods, you can choose a consignation sale.You would get a share of the proceeds from the sale of your assets.It is possible to reach the largest audience by selling your assets on the internet.If your assets are large or heavy, shipping costs may affect your profit.You can hire a professional auction company to come to your business site and sell items at a set time.You can advertise the sale online or publish an inventory list.If you want to sell most of your items quickly, this may be a good option.If assets are not so specialized, you can do an online auction.The best place to hold the sale is your business premises.The costs associated with moving the items will be reduced.
Step 7: All pre-paid expenses should be returned.
Send a letter to your insurance company requesting the return of any prepayments after you establish a closing date and begin selling assets.The date that your policy will end should be listed in your letter.Repayments of pre-paid utilities or other expenses is something you should ask for.After the business has stopped operating, this should be done.
Step 8: Inform your creditor.
Discuss your plan to liquidate your assets with your creditor.You can present your plan to your creditor after you develop it with your accountant and lawyer.Your creditor will most likely give you permission to move forward if your plan appears reasonable.It is possible that your notification requirements are different between secured andUnsecured Creditors.The secured creditor is the one who lent you money.They have the highest priority when it comes to repayment.Your attorney should review state laws to determine if you are responsible for publishing an announcement about the business's pending closing.There are restrictions on the sale of assets.It's important to figure out your personal liability and exposure to the company closing.This depends on the structure of your business, such as whether it is a corporation, sole proprietorship, or partnership.You may have to give them a certain amount of time to submit debt claims.You have to give them an address where the claims should be sent.
Step 9: State and federal taxes must be filed.
If you want to negotiate a settlement with the IRS, you must satisfy any taxes owed to the government.Some of the taxes that you may owe are listed below.Sales tax is paid.Social Security and Medicare taxes are paid by employees.Federal and state income tax returns.There are tax reforms for your partnership or corporation.Tax returns for employers.There are holding statements.The statements were made by the contractor.The plans for the pension.The closing a business check list is provided by the IRS and can be found at: https://www.irs.gov/businesses/small-businesses-self-employed/closing-a-business-checklist.
Step 10: You should pay your employees.
You should work to satisfy your financial obligations after you have sold all of your assets.Depending on the laws of your state, you should pay employees by their last day of work.Employees in your state may be required to be compensated for unused vacation time.If you have more than 100 employees, you must give them at least 60 days' notice that the business is closing.There are requirements for businesses with less than 100 employees in some states.Discuss this notification with your attorney and make sure that you are following all federal and state employment and labor laws.
Step 11: Terminate ongoing contracts.
You can find records of services or products that have already been paid for.Deposits must be returned in full.Contact customers under ongoing contracts to settle the account.
Step 12: Get rid of your lease.
You must notify the lessor of your plan to close your business if you are a party to a commercial lease.You may have to pay all rent at the end of the lease.To understand the landlord's right, review your lease to identify and understand any liabilities, penalties, or notices required.You might not have the right to sublease.If contention is likely, an attorney should be involved.You can reduce the amount that you have to pay.If you can find another tenant to take over the space, you don't have to pay rent until the new tenant's lease starts.If you can't find a new tenant, you may want to negotiate a settlement with the landlord to buy yourself out of the lease.If you don't have a lot of assets, a landlord may agree to this in order to get some compensation.
Step 13: If you want to settle your debts, you have to do so with your creditor.
You are responsible for paying off the debt your business owes if you have satisfied all of your legal reporting and payroll obligations.If you are unable to repay all of your debts, you may be able to negotiate a reduced repayment.Your lawyer and accountant will look at all of your claims, prioritize those that you have to pay first, and negotiate potential settlements.You have to repay all of your debts before any funds can be given to you.
Step 14: Assets should be given to owners and partners.
If you have paid off the debt, you can distribute the remaining assets to the business owners or partners.If a creditor makes a last minute claim that you must pay out, you may want to leave some funds in a contingency account.
Step 15: All business bank accounts need to be closed.
After waiting a reasonable amount of time for the last claims to be made, you should close the remaining business accounts and distribute the funds to the owners and/or business partners.
Step 16: You should keep your business records.
Even though your business is closed, you still have an obligation to keep your records up to date.It is advisable to maintain your records for at least 3 to 7 years.