Getting out of business can be just as complicated as getting started. You cannot just walk away. You must organize an orderly cessation of activities. Here’s how to close a business properly.
Make Sure Everyone Wants to Dissolve the Company
Hold a meeting to discuss the dissolution of business. You may want out of your business, but your partners or shareholders may feel otherwise. Establish the direction for the end of business before beginning the process.
In many instances, the agreements you created when you formed your company describe the steps necessary to dissolve the company. A partnership may require you to offer the other owners a chance to purchase your portion of the business. For corporation and LLCs, shareholders vote on a resolution.
File Your Documents of Dissolution with Your State Government
These forms declare your intention to bring your company to an end. Each state has different rules concerning the timing of these declarations. Some require you to file before you notify creditors, and others expect you to file afterward.
Settle All Debts
Your financial obligations still exist. Before you dissolve a business, you must notify all interested parties of your intentions:
When you are confident your final expenses have been taken care of, close your business accounts and distribute the remaining funds to former owners.
Record Keeping and Important Documents
Even if the business no longer exists as an entity, you may still need to answer questions if the IRS audits your company. Keep your documents organized and arrange to store your files in a secure location.