Closing a business can be hard. You probably wanted your business to continue operation and outlive you by decades, but sometimes, closing up shop is the right decision to make.
Unfortunately, closing your business isn’t as simple as shutting the door and turning off the lights. There are some complicated legal and financial procedures that you will have to invest your time in if you want to do it right.
It’s important to take all these necessary steps in order to ensure that you’re protecting your assets, and that you’re fulfilling all legal requirements under state and federal law.
Experienced small business attorney Tom Walker suggests that you keep in mind these six steps as you close the doors on your business.
6 steps to take when closing a business
- Review your business’s articles of organization: Before you go any further, check with the articles of organization or other governing documents of your business. If you are the sole proprietor, you’re probably fine to make these important decisions by yourself. But if your business is a partnership, an LLC, or any other kind of joint venture, these documents will help you determine how to distribute funds fairly, how to determine a fair market value for your business, and what legal responsibility each owner has in the closing process.
- Provide advance notice to all interested parties: Employees, clients, creditors, contractors– these and more parties involved with your business need to be informed about your decision. Some states have legal requirements for when and how these parties must be notified. If you follow these rules to the letter, it can help protect you if a creditor comes knocking after you’ve already closed your business. This is also a good time to develop a strategy for collecting outstanding balances in a way that doesn’t discourage your current clientele from paying what they owe you.
- File the necessary paperwork in the state of Idaho: Once you’ve issued proper notification to all of the people involved with your business, it’s time to let the government know of your intent to close down. In Idaho, you are required to file Articles of Dissolution with the Idaho Secretary of State. It’s also a good idea to cancel any registrations, licenses, or permits that your business won’t be needing any more.
- Pay your taxes: Just because you’re going out of business doesn’t mean you don’t have to pay your taxes this year. Calculate the final taxes that you owe, notify state and federal tax agencies, and check to make sure that you’ve completed everything in this IRS checklist.
- Sell the company’s remaining assets: Once you’ve jumped through all the necessary legal hoops, you can finally begin to settle all of your business’s finances. Identify the assets and inventory that your business owns, and sell these assets or distribute them in alignment with your closing procedures. Before the owners of the business receive any of the funds, you must first use the money recouped from the sales of these assets to pay final creditors.
- Pay out the remaining funds to the business’s owners: Now that taxes have been paid, creditors have been repaid, and everyone that needs to be has been notified, you can finally distribute the remaining funds to the business’s owners.
Call an experienced Idaho Business Attorney Today
Closing your business doesn’t have to be painful, but chances are that it’s going to be a bit complicated. At Generations Law Group, we can help you make the right choices to reduce unnecessary burdens, minimize risks, and successfully turn the next page of your life. Contact us today to schedule a consultation.