Legal steps to closing a business
Unfortunately, closing a business isn’t as simple as locking the doors and laying off employees.
An often drawn-out process, a business owner must follow a long list of sometimes complicated legal steps.
So before you get started on the checklist below, be sure to assemble a dissolution team. Closing a business may actually require an accountant and/or a lawyer.
Step 1: Vote
If there is a written partnership agreement or articles of incorporation, be sure to follow voting procedures. Dissolutions often require a 2/3 vote.
Step 2: File Dissolution Papers
Even if not required, it is a good idea to file dissolution papers with the state. Doing so notifies creditors that the business cannot incur further debt.
Step 3: Notify Third Parties
Let your employees, business partners and customers know that the business is closing. Those with concerns can be dealt with early on in the process.
Step 4: Settle Accounts
You will need to notify creditors and pay your debts, as well as collect any debts owed to you. Also make plans for any contracts that last after your closing date.
Step 5: Notify Other Government Entities
When closing a business, notify any agency that registered your business or issued a license. There may be fees, taxes or paperwork involved.
Step 6: Distribute Assets and Close Bank Accounts
The final step to closing a business is the distribution of assets and the closing of bank accounts. Be sure to have real estate and personal property appraised. All assets must be distributed in accordance with business agreements.