Steps Needed in Closing a Business Solids
Closing a business does not happen in a
snap of a finger. It is a rather complicated process that varies depending on your business entity.
Seeking Approval Before deciding on closing your business,
you need to gain consent and approval of your business partners or stakeholders.
Pay off Debts Before closing a business, you need to
settle the outstanding debts. Notify your
insurers, lenders, vendors, suppliers, and
maybe you can work it out and there is no need of closing your business.
File Taxes within the Deadlines You need to file appropriate taxes within the federal deadline. You also must
mention the key steps by filling out all the relevant forms.
Obtain Certificate of dissolution You should fill this legal form to dissolve the articles filed to form the company. Notify the IRS using its liquidation or
corporate dissolution form, along with tax
clearance document. This proves that the business is free from all sorts of tax dues.
Steps (cont.)
Comply with Labor Laws U.S. Department of Labor says that
businesses with over 100 employees must
give at least 60 days' notice before closing the business. You need to pay their final
paychecks according to the state laws. This may not apply if you are a small business, but it is worth keeping in mind before closing the business.
Closing the Accounts Notify all the relevant parties like lenders, vendors, service providers, and banks to
close all your accounts as you won't need the services anymore. Cancel all the licenses, registrations, and permits.
Distributing the Assets Once everything is settled, and all the debts and taxes are paid off, you can distribute the assets based on your
shareholding and rights. You may keep
some portion to settle any unforeseen debt or miscellaneous expenses. If you are the sole proprietor, you can keep everything
with you. If you are a corporation, then the cash and assets are divided based upon the number of shares held. For LLC and
partnerships, assets are divided based on each partners' capital account.
Now you know the steps involved in closing a business. But if you
still have doubts or need any more information, it is recommended to get in touch with a debt attorney in your area. Sources: Original Blog