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Closing Your Business Properly

Mar 30, 2008
Perhaps your business is not doing too well. Maybe you are just getting closer to retirement. It could be that you have had enough or you can see no long term future for the niche that you occupy. Maybe you are just struggling to sell your small business to a third party. Whatever the explanation, there are standard actions that should be taken when closing your business.

Seek Advice - get in touch with your accountants and lawyers and seek advice on the best way to run down your business ready for closure. If you foresee a large sum of money being left after the closure, speak to a specialist tax advisor.

Proper Planning - make detailed plans as to how you are going to deal with your employees, customers, suppliers & banks. You also have to look at ways of disposing all stock, collecting outstanding debts, settling any sums owing, dealing with the property and informing the tax authorities.

Employees - Sort out their wages, pay any outstanding holiday pay and look at ways of terminating their employment contract. Give them plenty of notice so that they have ample time to start looking for another job.

Customers - give your customers plenty of notice so that they have time to source supplies elsewhere.

Suppliers - stop ordering any more goods, pay off your suppliers and inform them of the impending closure.

Selling Your Stock - get rid of as much stock as you can to your existing customers and sell the rest at a knockdown price to your competitors. Your suppliers might also be able to help you in disposing of your stock. If there is any stock that is difficult to shift you could perhaps sell it at the auction.

Remaining Assets - dispose of all your machinery and any other equipment that you do not think you will have a need for in the future. Return any equipment on loan.

Clear All Outstanding Debts - Once you have sold all your stock pay off all your suppliers. Ask all your suppliers to send you a final statement so that you can be sure that all invoices have been paid and all credit notes taken into account.

Property - You can either sell your property or rent it out to another business. Get advice from your estate agents as to best way forward. If you rent your premises negotiate an exit with your landlord.

Taxes - Get your accountant to prepare final accounts, pay off any outstanding taxes, notify all the authorities and send final letters informing all the relevant bodies that the business has now ceased trading.

Banks - finally when everything above has been taken care of, pay any monies left to yourself (after clearing all taxes), cancel any existing credit cards, return (or destroy) any unused cheques and close all existing bank accounts.

If you have planned your exit strategy well, then it should be a simpler process. Closing a business can be very stressful but it need not be difficult. Once you have exited you do not want to have to deal with any comebacks.
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