Procedure Of Closing A Business

Though closing a business may not be a welcome move for the owner, things can be made a little less difficult by learning how to do it the right way to avoid legal and other hassles. Before you finally shut the doors of your business, there is an array of tasks that you must complete thoroughly. Some of these tasks are related to just sound business ethics while others are about meeting the legal requirements. Following is a brief rundown on how to go on with the process.

Inform The Employees In Advance

If your employees listen about the closure from a third party, they will lose respect for you. On the other hand, if you inform them well in advance, this will show that you have respect for them and you value their services they offered to your business. It is true that some of the employees will leave you immediately after hearing this news, but you must be ready for this while you are closing a business. In most cases, it has been found that the majority of employees continue working till the process of closure is complete.

Notify Your Clients

The next step is to notify all your clients of your decision. It is also a good idea to give a final date for the clients to place orders, mentioning it clearly that no more orders will be accepted after this date. This will make sure that all orders are completed properly before the production is stopped. Accept only as much orders as you can comfortably complete. After all, you do not want to close your business in a bad taste. While you are closing a business, it is better if you send a thank you note to all your clients and customers by sending them a list of reputable vendors that provide similar kind of services or products.

Close Your Business Accounts

Once you complete all your orders, stop taking further orders and close all your business accounts. Note down the details of the final balances on your closed accounts.

Pay Outstanding Dues

If you have some outstanding financial commitments, make sure you honor the same. Pay off all your dues. This way, you will not lose your reputation in the market and the doors will be wide open in case you decide to start a new business or just decide to work with other vendors in future.

Closing a business also requires you to prepare an array of financial documents. Fill all the forms that are required by the local and federal statute. It will make it very easy to shut down your business officially without much hassle. If it is a corporation, you will also need to notify the state where you were running your business. In the end, make sure you note down the final date when you stopped the operation and the specific date when your business is dissolved officially.