No one wants to close the doors on their business. Unfortunately, with the pandemic still in full force, many businesses in California and across the country are doing just that. If you find yourself in this situation, there are many factors to take into consideration. The good news is that many professionals, such as attorneys, accountants and financial experts, can help you with this process.
Once you choose to close
You have many steps to take to properly close your business. Here are some questions to ask yourself:
- Do you have partners? If so, you must all agree to the closing. Your organization’s documents will lay out how and when you can dissolve your partnership or LLC.
- What documents must you file? Depending on your entity type, you may have to file dissolution documents with the state.
- Do you have employees? If so, you must follow certain regulations for notifying and paying them.
- Do you owe taxes? Make sure you file a final return, cancel tax ID numbers and notify both state and federal agencies.
- Do you have permits and licenses? Consider whether you need to cancel any business registrations you have associated with your name.
- Are you facing bankruptcy? This is a major question, and if you think the answer is yes, you should consult with a bankruptcy attorney right away to discuss your options.
Close or sell?
You may decide to sell or transfer your business rather than close it. Your first step before selling is to have a business appraiser value your business for potential buyers. If you find a buyer, have your attorney draft a sales agreement. You will have to decide whether you are selling all assets, including real estate, inventory and proprietary information. You will also need to work out how you will create a smooth transition to the new ownership. If you are transferring, say to a family member, you may want to consult with a tax professional.
No matter what path you choose, closing this chapter of your life is likely to come with mixed emotions. Hopefully, this change will allow you to move on to your next chapter and open up new possibilities for you.