From cashing out to winding down, the approach you take for closing your business will require certain steps to be made in order to properly bid adieu.
Whether your business is large or small, old or new, at some point every business owner must ask, “what next?” In many cases owners find themselves ready to retire, and in others they’re simply unable to keep their heads above water. Whatever the reason may be, winding down is an inevitable stage in the business process. Below we discuss the three most common options for winding down a business, and the corresponding steps to be taken for a proper exit.
Succession. Business succession involves the handing over business leadership to a family member, friend, or colleague from within company. In order to ensure a smooth transition a succession plan should be put in place well in advance of the current owner’s exit. A succession plan should identify all exit-related objectives, taking into account all legal requirements, tax implications and obligations, financial responsibilities, profit sharing, and goals for business continuity.
Sale. The sale of a business is preferred when an ideal successor is not in place, or due to a particular financial situation. First, a buyer must be found. The proper sales pitch will include the reason you are selling, the benefits to your business, and a price. In order to recoup its full value you must know your businesses worth. The disposal of property, such as, real property and business assets, may require the completion of certain tax forms after sale.
Closure. Closing your business may be required when business cannot continue due to its financial health or the inability to sell. In general, for an LLC or corporation to close its doors, the decision must be recorded and filed with the secretary of state. In addition, all taxes must be paid, bank accounts closed, notification given and accounts receivable addressed, and more. Most importantly, business owners must also remain in compliance with labor and employment laws, paying all final paychecks, reimbursement for unused vacation time, and distribution of employee pension and benefit plans.
Exiting or closing your business is a personal and financial decision that requires significant consideration and guidance from outside professionals. If you are considering leaving your business or are in the process of winding it down, the experienced business services attorneys at Anselmo Lindberg & Associates are here to help to ensure that all items are buttoned up before you take your leave. Contact us today.