While the decision to end a business is not always easy, it may be necessary to move on to new opportunities. However, you cannot simply declare an end to your enterprise and walk away.
To make sure you make a clean break from your company, you should take the time to settle the remaining obligations of your business. You will probably have to address all of the following before dissolving your operation.
Your business taxes
Make sure the IRS and your state tax authority know of your intention to close your business. There will likely be final tax returns you must file for both the state and the federal government. The IRS also has a checklist handy for business owners to dissolve their companies.
Debts to creditors
It is likely that your business still owes money to partners, vendors or lenders, so be aware of any debts your business retains. This is important because even if your business closes, your creditors may still pursue payments from you.
If your business lacks the money to cover its debts, you will have to explore options to pay them off. Some businesses sell off remaining inventory in a final sale to raise money for debt payments. An auction may be another option.
Your business contracts
You should also know if your business has ongoing or incomplete obligations to other companies, vendors or even a government body. Simply shutting down your business may not be enough to sever these agreements. If you do not properly fulfill your contracts, you could end up in court even if you have dissolved your business.
Situations differ according to individual business owners. Be sure that you dissolve your business in a way appropriate to your circumstances.