Making the decision to close a business can be difficult, especially if you have partners or a board of directors to consult with. When the decision to dissolve the business is final, there are some important steps to take to protect your reputation and financial status:
- Notify the Appropriate Parties Your Business Is Closing
Getting the word out to customers and clients may help them prepare to transfer their business to another company. More importantly, you need to file documents that let the government know you are dissolving your LLC or partnership, so they won’t continue to hold you responsible for tax payments and filings. Your creditors also need to know about this change.
- Prepare Final Paychecks for Employees
Depending on your state laws, this may include payment for unpaid leave time or other unused benefits. Employees should receive final paychecks on or soon after their last day of work. You may be required by law to give your employees advance written notice that the business will be closing.
- Contact the IRS
You will have to cancel your Employer Identification Number (EIN) and file your final business tax return. Closing out your sales tax filings may take a little longer. The IRS has a checklist you can follow to be sure all tax issues for dissolving a business are handled.
- Cancel Business Credit Cards
Notify your bank that you’re closing your business, so they can close your business account. Pay off any business loans and cancel your credit cards. It might be a good idea to ask employees to turn in their corporate cards as well, so those cards are accounted for.
- Cancels Permits and Licenses
Any licenses you have in your business name should be canceled to prevent fraud. Permits and registrations should be canceled as well. Cancel your business name and any registered trade names associated with it.
Preserve Your Reputation for Future Ventures
Dissolving a business doesn’t necessarily mean the end of your career. It may just be the right move for now or for that particular business. By meeting your obligations to customers and creditors, when closing a business, you protect your reputation and your finances. Should you ever decide to open a new business, you won’t have old debts or a bad reputation hanging over your head.
The best way to end your liability when closing a business is to consult an expert in the field. Talk with a professional who can guide you through this final step and ensure everything is resolved properly.