If you have made the sometimes difficult decision to close or end your business, you may next wonder how to go about closing the business correctly. The U.S. Small Business Administration (SBA) provides some useful direction for the dissolution of a business.
It is important to first keep in mind that unless the business is a sole proprietorship, there may be other parties it is necessary to consult before the determination to close the business can be made. Any discussions will need to take place according to the company's articles of organization, taking into account the business form for the company. When following the guidelines established by the articles of organization for dissolving the business, it is important to carefully document any decision that is made and maintain careful records throughout the process.
The SBA recommends that when closing a business, the business owners obtain professional advice, as there are a variety of important implications, including tax implications, which must be considered when properly dissolving a business. Along those lines, it is important to legally dissolve the company, otherwise certain liabilities may continue for the company and individuals associated with the company. This is especially important for LLC and corporate business forms but may also be an important consideration for sole proprietorships and partnerships as well.
Other important considerations, including, but not limited to, employees and important tax concerns should also be properly addressed during the process of dissolving a business. Any creditors should also be contacted and informed of the closure. Just as it is important to have a strong knowledge of the process when forming a business, it is equally important to have a clear understanding, and guidance, of how to properly dissolve a business.
Source: U.S. Small Business Administration, "Steps to Closing a Business," Accessed Dec. 8, 2014