If you’ve decided the most expedient plan is to close your business, you will need a coherent strategy to exit with the minimum amount of grief for everyone involved.

Closing DownA Sole Proprietor can make the decision to dissolve on his or her own.  A partnership, LLC, or corporation will require the dissolution be handled according to the documents originally filed to create the organization (e.g. Articles of Incorporation). In either case a visit to (at minimum) your business lawyer and accountant early in the process will help you avoid major pitfalls.  What dissolution documents must be filed and which should be filed to protect you and other owners may be different in different states.   

You will have a range of financial obligations to meet all at once (employee payroll, creditors of all kinds, taxes…etc.) and in some businesses revenue will decrease precipitously as you near the exit date. Your plan must include dealing with all of the outlays to ensure you do not exit the business with personal liabilities.

State and local laws may dictate how soon you must notify employees of an impending closure You will have to mitigate between being fair to employees and having employees as long as you need them. 

Employees will likely understand what is happening before you make the announcement and some will immediately begin looking for other employment. To keep key people try offering a pay out, assistance finding a job, and glowing references if they stay as long as you need them. Don’t lie to them. They will know and they will leave.

Finally, put all your business records (including employment records, taxes and bank statements) in order and keep them for seven years just in case.

Share This