Dissolving the enterprise
So you’ve weighed everything and, after much consideration, you have decided that the best recourse is for you to shut down your business. It’s a painful task, but sometimes it just has to be done. Don’t feel bad: Just think of this as a rebirthing phase, and that you have to go through this in order to start again!
Here’s a quick list of things to remember when you are shutting down your business:
Set a formal date for closure
Do not just wind down operations and fade out of sight. Doing so can be risky as you may end up with larger utilities and overhead expenses than you could have gotten away with.
Put your foot down and declare a date for the formal cessation of your business. Once you have established this, make this known to all your stakeholders, including employees, suppliers, distributors and creditors. This way, all contractual obligations can be worked out and revised in the open, reducing the risks of your business owners being subjected to possible litigation should stakeholders feel as if they have been taken advantage of.
Prioritize your obligations
Make sure to pay all your creditors as well as all utilities expenses first and foremost. Inform your utilities providers about your impending cutoff so that you will not be billed beyond that date.
By law, you will have to prioritize the payment of your loans before you distribute funds to your co-owners. Not doing so can subject you to legal action. Note that you may also have to pay severance packages to your employees.
Inform your workforce
Give your workforce ample time to prepare for the imminent closure of the business. They will need time to look for new jobs. They will also need to inform their respective networks about the impending closure of your business.
Get professional advice
You will need professional help in order to make sure that your transition would be all aboveboard and beyond reproach. Seek a corporate lawyer, for instance, or a business consultant. This is particularly true for matters regarding taxation, termination and paperwork with the proper government agencies.