It’s a known fact that many businesses fail. The business landscape can be a competitive and difficult place to grow and thrive. Sometimes, things happen outside the business’ control that greatly impact its ability to be successful. However, failure is not the only reason to dissolve a small business.
The owner of the business may decide that they want to relocate, do something else with their life or make some other decision that means dissolving their business is the right decision for them. Whatever the reason for closing a business, there are often more steps to complete than just hanging a closed sign in the window. If the business is not a sole-proprietorship, all people involved in the business must be properly notified, and, if necessary, one must follow the rules of the dissolution contained in documents that may have been drafted when the business was started.
It is important to let the federal and state governments know that the business is dissolving. This is for tax and administrative reasons. Also, if the business has any outstanding debts, the creditors should be notified. The next step would be settling any of the outstanding debts and determining what outstanding bills or notes that the business incurred.
It’s important to also collect on any debts owed to the business. Failure to recognize or lay claim on that money may result in those debts never being paid back to you. Another way to recoup money is to sell off any assets the business may have accumulated. The sale of property, equipment, and inventory may all be ways to get all the money possible out of the dissolving business.
Source: FindLaw, “Necessary Steps to Dissolve Your Company,” Accessed Jan 1, 2018