Are You Closing A Business Because Of Business Failure?
Do you need tips about closing a business because of a business failure? First, I'm sorry it's come to this. I've been there, survived it, and am writing this to help you.
There's certain things you'll need to do now no matter what kind of business you're closing.
Closing a business in 10 steps
- Landlord- If you're closing a business that's home-based or on your own property, you're off the hook here. If you're renting or leasing, let your landlord know your plans as soon as possible. They probably have an idea it's coming if your rent's been late a few times.
If you signed a yearly contract, you may have to wait for the lease to run out. Perhaps the landlord will be relieved and let you "off the hook" early. Or you may be able to sublease the property.
- Utilities- Close your business accounts as soon as possible to prevent recurring charges after you no longer need them. Contact each company... they'll help you.
- Contractual obligations- Did you sign extended contracts with anyone? Sorry... you're probably stuck paying until the contract is completed. Remember next time... don't sign for anything unless they've got a gun. Think I'm kidding? No. I paid for credit card processing equipment for a year after my business closed. I felt that $39.99 burn once a month. Sigh.
- Government- There's a ton of tax details for business, especially if you were an employer or a corporation. Closing a business needs to be done properly. For US businesses,
this page at the IRS website
will show you what they need you to do. Not in the US? Look for info at your government's website... I'm sure it's there.
- Employees- Believe me, they already know that something's wrong. Level with them ASAP, and help them find other work if you can. If you provided insurance for them, the COBRA act allows them to keep paying for their own insurance for several months. And don't forget that they'll still need a W-2 next tax season.
- Business assets & liabilities- Do you have business assets like computers, furniture, display equipment or other things? Make a list of everything the business paid for. And make a list of what you personally purchased for the business. What did each cost? Write it all down and put the list where you'll find it later.
- Information- If you own a business computer that you're going to sell or otherwise lose access to, back up the information you need. Put it on cd or thumb drive. Put it somewhere safe. Make a list of business liabilities. Write down how much you owe for each.
- Inventory- Left-over inventory to sell? If you're in retail with a B&M location, have a going out of business sale to get rid of as much as possible. Try Craigslist or eBay to get cash for it quick. Don't forget to save receipts for next tax season. Your accountant will need to see what you paid & the loss you took.
- Contacts- You have suppliers, other business associates, and your loyal customers. It won't hurt you to write a simple “I'm closing my business, thanks for your support” letter so you don't just disappear. Keep it simple and factual. They may be valuable contacts for you later.
- Debt and creditors- This can get “ugly” fast. Got debt? If you do, get ready for a roller coaster ride. Is it credit cards & bank loans? They want their money... NOW! And they don't want to hear your sad story. If you continue to make your payments on time, all should be well. Contact the company to close the account and work out your payment schedule.
If you have trouble making those payments, you'll be introduced to the world of debt collectors. You do have certain debtors rights. I could right a book on this one, and it will get its own web page soon.
Closing a business due to its failure is an emotional time for some people. Follow these steps until the business is properly closed. Then put the paperwork away someplace safe. When it's tax time or you're dealing with creditors, you'll have the info you need. But for now, take the time you need to grieve your loss and deal with the stress of your
Things will be better... sooner than you think.
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