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Holly Ocasio Rizzo

Guide to Closing a Business

Shutting down is not as simple as it seems


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Federal, state and local laws all play a role in closing a business, and for that reason it can be wise to hire a lawyer to see you through the process. Overall, you'll need this strategy to effectively make your exit:
  1. Create a closing plan that's specific to your type of business. Sole proprietorships, partnership and corporations all require different actions, with corporations often requiring the most legal and financial steps.
  2. Let your customers, suppliers, creditors and others with whom you did business know you are closing.
  3. Remember that the work doesn't end once you shut the doors. You still may need to handle receivables, payables, refunds, legal settlements and other matters — all of which require tax reporting.

Action Steps
The best contacts and resources to help you get it done

Follow a checklist


The steps for closing a business are as important as the steps for starting one, and you don't want to miss any of them.

I recommend: FindLaw offers a business-closing checklist adapted from the Model Business Corporation Act, or get a checklist from law publisher Nolo.com.

File the necessary tax documents


You must make final tax deposits, issue final withholding information to employees and report many other kinds of information to the federal and state governments.

I recommend: The Internal Revenue Service provides links to the federal instructions and forms you'll need. The IRS Tax Map answers questions by topic. Use State and Local Government on the Net to find the requirements of state and local governments.

Get free counseling from SCORE or small business development centers


Getting out of business properly may require just as much help as starting up.

I recommend: Find help through SCORE or a small business development center (SBDC) operated by the SBA in your area.

Tips & Tactics
Helpful advice for making the most of this Guide

  • Notify your insurance agent about canceling policies, but be prepared to let your insurer know about any liabilities that may arise after you've closed your doors.
  • Remember the importance of closing professionally, because someday you may go into business again.
  • Your accounting method may affect when you file your final tax reports — which could be months after you close.

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Provides free information on business bankruptcy and the alternatives to it.

SCORE is a non-profit organization that offers free counseling to small business owners. Volunteer counselors are retired business executives.


 Best Sites to Learn MoreBack to top 

Offers easy-to-follow information about the legal implication of selling and closing your business.

Provides articles on the tax requirements for businesses, including closing a business and filing for bankruptcy.

AllBusiness.com offers articles and advice on successfully selling a business.


  Best Blogs and Forums Back to top 

This discussion isn't very active, but does have some useful threads about closing down.

SCORE is a non-profit organization that offers free counseling to small business owners. Volunteer counselors are retired business executives.


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