In this guide, we will take you through the legal and administrative tasks required to close your business.
By fulfilling the requirements listed below in order, you will avoid potential legal disputes, a tarnished reputation, and unnecessary fees related to the closing. We are here to work with you on making this process as smooth as possible.
1.Receiving Board Approval and End of Business Plan
Closing down operations and dissolving your company is a serious decision that requires board approval. Start by setting a board meeting and vote as a board on whether to dissolve the company. You call for a board meeting by emailing email@example.com. Once you vote to dissolve, agree on an end of business plan with your board members for the closure process.
2. Collecting Receivables and Fulfilling Orders
The second step of the closure process is resolving financial obligations. Once you close your business, it can be difficult to collect your accounts receivables (AR) or the money you are owed. Start by collecting outstanding accounts receivables to get cash in your hand. Next, notify your existing customers and fulfill any remaining purchase orders.
3. Liquidating Assets and Notifying Creditors
To pay off any outstanding debts to lenders, suppliers and other service providers, you need to start liquidating assets. Liquidating assets means selling your assets such as inventory or machinery for cash. Write a list of your inventory and assets like pieces of equipment, ingredients and packaging. We will work with you on building a plan to sell excess inventory and assets. Notify your creditors and settle or pay your debts to the extent possible.
4.Notifying Team Members, Paying Payroll and Taxes
After you inform your team members of the closure, submit final payroll forms and make deposits. Submit your state sales tax forms and any taxes you collected up to the date of closing and pay off what's owed. Make sure to file your final income tax return and employer tax return. The IRS has a checklist that you can use to navigate these forms.
5. Distributing Remaining Assets
After paying all your debts, taxes, payrolls, and loans, distribute any remaining cash or assets between all owners.
6. Closing Accounts and Keeping Records
Once you make the final distributions, close your business bank account and cancel all credit cards. After completing these steps, file a certificate of dissolution to dissolve your business. Finally, make sure to maintain a copy of your tax, employment and business records for at least seven years in case of any claims that arise after the closure.