Starting a business seems laborious and multifaceted, but you’ll learn soon enough that closing it takes an even lengthier amount of time and more red tape in the process. There are many reasons why you’d want to close your business for the remainder of the year. Perhaps a much-needed vacation or a strategic move to shield yourself from losses due to a slowdown in market demand. Closing a business properly, however, is important to opening it easily the following business year. It lessens the frustration and paperwork you have to deal with when you open up shop again. So, how does one prepare for a good temporary business closing? Here are five things you should know about dealing with these things.
Extend it
Just because it’s the start of the Ber months, doesn’t mean business will be slow from there. Whether you’re an ice cream truck or a souvenir store, there’s always customers who are in need of your product or service, even during the off-peak season. Extend your business at least up to October to maximize revenues before closing up shop.
Liquidate Assets
Every business has assets including hardware and software. Liquidate your office desks and furniture, appliances, electronics, and proprietary software. The amount of money you get from liquidating assets can be put towards paying creditors or to your bank account. If you own the real estate or vehicles used by your business, make sure to liquidate that as well. Aside from tangible assets, intangible property including commercial leases, desirable contracts with suppliers, copyrights, and utility or design patents are also something other businesses and vendors may be strongly interested in acquiring.
Sell Remaining Inventory
Before you shut off the lights at your stock room or warehouse, make sure space is already cleared. Since the excess inventory is already paid off, it’s ideal to sell off the remaining products or materials to at least recoup the money you’ve already put up for them in the first place. A big sales event is oftentimes the simplest road to clearing out excess inventory. A “Blow-Out” sales event can be done weeks or months before your planned exit date. It depends on you and the management team if you wish to tell your employees and suppliers right away or wait for the last week to announce the Out of Business route you’ve chosen. If, even after your bulk sales events, you still have remaining inventory, consider online marketplaces, such as Amazon or Craigslist.
Notify Your Employees
Closing shop will have a huge impact on your workforce. Don’t just leave them all scared and confused after years of working for your brand, Notify them as early as possible about your plans to close up shop so they can begin looking for a new source of income. You may have to issue a final paycheck on the last day of your employees instead of waiting for the next payroll cycle. Some states require you to include any unused vacation days and sick leaves to the final paycheck amount. Be sure to comply with the laws mandated by your state. If you do not have enough money to fulfill these final paychecks, consider securing a quick business loan from Advance Funds Network, which takes an average of two hours to get pre-approved and funded.
Close Your Business Accounts
When closing a business, always take care of the liabilities first before paying out money to partners and investors. Before you divide the remaining equity in the company, collect any currently open accounts receivables and cancel leases and contracts. Any deficiencies or penalties should be paid as well. You don’t want these liabilities haunting you months down the line when you’ve already spent the equity you got from the business. If there is equity left to be divided after taking care of the liabilities, the excess cash and assets can be divided into the owners based on the percentage of ownership each one has claim to, which is usually dependent on the company’s structure, whether it’s a sole proprietor, corporation, partnership, or LLC.
Closing a business the right way will help protect you from any lawsuits and give you a fresh start to either open up a new enterprise or live a worry-free lifestyle with the equity you cashed out with.
