A small business owner may have several reasons for wanting to permanently close their business. In many cases it is simply because they are losing money. It could also be that the owners launched a company as friends and the relationship has soured over time. Or maybe the owners are ready to retire and have no plans to sell their company, pass it on, or merge with another business.
Whatever the reason, Maine-based small business owners should understand there are certain requirements and obligations when closing up shop for good. Below is a general checklist of steps to take. Consult with Filler & Associates to guide you through the process and make sure you are considering all applicable laws.
If you operate as a corporation, LLC, or partnership, you must take a vote to close the business. The decision must be approved by the majority of the shareholders. Remember the follow the guidelines established in the business’ organizational documents and to record the decision in writing.
Make a plan to liquidate the business. Involve the Board of Directors if applicable.
File dissolution documents, if required, with the government. This ensures that you won’t continue to be held liable for taxes and filings.
Cancel registrations, state and county permits and business licenses. Don’t forget your small business’ name(s).
Notify employees and comply with labor laws. Issue final paychecks to employees, and, if required, pay employees for unused leave. If you have 100 or more employees, you may need to heed the Worker Adjustment and Retraining Notification Act.
Wrap up final federal, state and local tax obligations The IRS has its own list of tax tasks that must be completed. Consult with Filler & Associates to make sure you are aware of these tasks. Remember to check the box on the appropriate federal income tax return that the document is a final return.
Pay business debts. Notify creditors and lenders and settle outstanding debts. Ask them to send a letter stating that the bills were paid in full.
Collect outstanding accounts receivable.
Cancel business credit cards and insurance policies. If your business rents, notify your landlord by giving the notice required in the lease.
Close business bank accounts.
Sell off any remaining inventory and assets. Distribute any net proceeds to shareholders.
Maintain required records. A business may be required to maintain certain records even after it is closed.
Notify creditors, employees, customers and others how to contact you in the future.
As you can see, there are numerous tasks that may have to be completed. Your situation may have other things to be considered. Talk with Filler & Associates for more information about your situation.