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:
- 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.
- Let your customers, suppliers, creditors and others with whom you did business know you are closing.
- 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.
The official source of Closing a Business is the Closing a Business page at Business.com
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