Starting a business is a complicated process that requires a lot of planning, advice and work. The same is true of ending or dissolving an existing business entity. You don’t just get to terminate your lease and move on with your life.
You need to plan for the strategic dissolution of the company in order to avoid financial or legal consequences. What are some of the things that you need to do when the time comes to dissolve your business?
Inform your employees, and review your obligations to them
Employee severance packages and pension benefits are among the potential complications that employers have when dissolving a business. Federal laws like ERISA exist to ensure that employers don’t shirk their responsibilities to existing or retired staff members.
Once you know what your obligations to staff will entail, you can make sure that you have adequate resources set aside to handle those obligations. Informing your staff as soon as you have made all practical arrangements is usually important too, especially for staff members who aren’t ready to retire and will need to start looking for a new job.
Make sure you have capital set aside for taxes and debts
Just because you close your business doesn’t mean that your obligation to pay taxes suddenly ended. You will have to file and pay taxes through the last day that your company is operational. Earmarking funds for future tax payments and preparing the tax documentation now while financial records are still easily accessible is usually a good decision.
You will also want to inform companies that you do business with or owe money to about your plans. Getting a final invoice or billing statement will help you settle your accounts now so that they don’t come back to haunt you later.
Take the necessary legal steps to end the company
Depending on the kind of business you started, dissolving the company may involve multiple steps. Getting help with this process is often necessary even for sole proprietorships. If you have an LLC or more complex corporation, guidance and help may be critical to the successful dissolution of the business. Just like you got assistance while starting the company, so too should you get help when you end the business.