Shutting your business down is a painful process, COVID or no COVID. It is hard to care enough to follow procedures at times like this, but it is important to do these ten steps so that there are not long-term, lingering implications affecting you.
You must collect your receivables before Debtors hear of the business closure. If Debtors are in financial constraints, get legal payment plans contracted with them specific to the current debt.
Give your landlord the required notice period and ask for leniency.
Get rid of inventory. Donate perishables or items for which you will get close to zero to a registered charity. These values are tax-deductible.
Sell the other parts of the inventory and movable assets that won’t disrupt the business’s closing.
Notify ALL your creditors. This changes the debt relationship with them but makes sure you have a debt settlement proposal ready. Always aim to protect your personal liability first, such as your landlord, bank and utilities, etc. Ask for leniency as less than the full amount might be an option. Once that payment is achieved, ask for a letter stating that full and final payment has been received and there is no outstanding debt against your name or the company. Make sure not to burn bridges.
Give notice to your team of employees. Have their paycheck payment plan preplanned and tell them the date of their last day, which will be the last paycheck date as well. Remember they will be due accrued or unused vacation days, overtime, commissions etc. Get all staff benefit payments up to date with the various bodies and organizations, i.e. unemployment.
If you received a loan for paycheck assistance for your company’s running, you must check if you can still use it if liquidating or if it must be repaid.
If you have a refund due to you from the tax department, get your tax returns up to date and make sure your tax payments are made as taxes are the first debt to be resolved before any others.
Sell off all remaining assets and make sure all sales are properly recorded in your books.
Cancel company credit cards, cancel subscriptions and cancel monthly services, i.e. some services might not be contacted as the account is up to date, so don’t let those fall through the cracks. Check through all suppliers and close and cancel.
If required, do state or federal steps of deregistering your business, closing off any permits, do your employee wages tax returns. Do your final income tax returns.
Leave your contact details with former business associates and key employees. There might be some things that have fallen through the cracks.
The New You
Don’t lose hope. This closure does not mean you have failed. Focus on how to make your next business venture successful. Pack your current business lessons into your backpack and keep moving. Odeo failed, and they moved on to Twitter. SocialNet failed, and they moved on to LinkedIn.The owners of Home Depot were fired from their jobs, which made them start their own company.
This doesn’t make it less painful. If you need help to neatly close off a current business and start planning your new venture, give us a call today and let us get you the best solution possible. Since we offer reliable online accounting services, we can handle the tidy closing off of your taxes and set out a stable foundation for your relaunch into a bright new future.