Close a Business
Tips on Doing It Right
- Seek Professional Advice —
Use the expertise of a business lawyer or business adviser, or consult an insolvency practitioner.
- Smart Exit Strategy —
Look for the simplest exit possible that leaves the owner, with no long-term liabilities or responsibilities.
- Seek Advice From a Good Tax Accountant —
Maximize the amount of money you can legally leave the business with taking into consideration your personal tax position.
- Plan Your Exit —
The longer you prepare for business closure the better the terms.
- Business Closure Is Not Failure —
Businesses fail, not entrepreneurs. If you can learn lessons and gain a greater understanding from the experience, you will be in good position the next time you are ready to go into business.
20 Action Steps to Closing the Business
- Vote to Close —
For corporations and partnerships, vote to close the business based on state business statutes. (This does not apply to sole proprietors.)
- Dissolve Your Business Officially —
Obtain a "tax clearance" and file the required forms, such as a "certificate of dissolution."
- Cancel State, County or City Permits and Licenses —
Examples: Seller's permit, business license, and fictitious or assumed business name.
- Cancel Your Lease and Insurance Policies.
- Collect Outstanding Accounts Receivable —
Do this before you notify your customers you're going out of business.
- Notify Your Employees —
Pay them their last paychecks within the amount of time required by state law.
- Notify Your Customers —
Fulfill any contractual obligations, if possible. Return any deposits or payments for goods not delivered or services not rendered.
- Liquidate Saleable Inventory —
Consider a "going out-of-business" sale.
- Make Final Federal and State Payroll Deposits.
- Submit Final Sales Tax Forms and Funds Due Up to the Closeout Date.
- Notify Your Creditors: Suppliers, Lenders, Service Providers, and Utilities.
- Comply With "Bulk Sales Laws."
- Settle or Pay All of Your Business Debts —
Money owed to your landlord, bank, suppliers, utilities, and service providers.
- Get Letters Stating That Your Bills Are Paid in Full —
Do so as you pay off each creditor.
- Cancel Your Business Credit Cards.
- Sell Business Assets —
File IRS Form 4797, Sales of Business Property or, if you sell the bulk of your business assets to one buyer, file IRS Form 8594.
- File Your Final Employment-related Tax Returns —
IRS Form 940, IRS Form 941, state tax withholding and wage reporting forms.
- File Your Final Income Tax Returns —
Check the box stating that this is your final return.
- Leave Contact Information —
Tell former business contacts, colleagues, and employees.
- Close Your Business Bank Account.
One of the biggest mistakes you can make is to rush closing the business. Take the time to go through each step. SBC can assist in closing a business.
Small Business Center Locations
Henderson County Campus
180 W. Campus Dr.
Flat Rock, NC 28731
Transylvania County Campus
45 Oak Park Dr.
Brevard, NC 28712