What you must know before you shut your business permanently
Deciding to close the doors and shut business is as difficult
as making that first step in owning your own business.
The number one reason for shutting down the business is because
of financial difficulty. If you find yourself unable to pay your
employees, order necessary inventory, or pay the rent, you need
to act right away to get your business back on its feet.
Before shutting your business down, conduct an extensive review
of how you run your business. Seek help from professionals, such
as turnaround advisers, a CPA and legal counsel. Find out what
parts of your business are contributing to its downfall. You
must fix the parts not working well, and come up with a concrete
plan to turn the business around before having to shut it down.
If it look like you can't turn your business around make sure
that you understand the actions needed to close your business.
(By the way, before you give up all hope, please read this website
that has innovative ways to save your business and your investment
from business closure.)
Now back to shut business.
Consider Chapter 11 bankruptcy. Filing Chapter 11 allows you
to stay in business while paying off your creditors, in hopes
that you are able to turn your business around and make profit
again. Don’t take this choice lightly. The agreement that
you and your creditors enter together will restrict you and your
business. Remember the priority is to pay off your debt.
Chapter 7 bankruptcy doesn’t allow for the opportunity
to repay debt over time. A trustee will sell all the business
assets. Then, the trustee will pay the money to the creditors.
As a business owner, you should consider that any assets you
used as collateral, such as your home, may be at risk in Chapter
7 proceedings. You will also have to honor any personal guarantees
that you have made for the financial obligations of the business.
Shutting down your business doesn’t mean you have to choose
bankruptcy. In fact, you should avoid bankruptcy whenever possible.
You will need to have legal counsel to help you shut business.
It is important that you work with someone who is knowledgeable
in business closing proceedings.
Make sure to tell anyone involved with your business that you
are shutting down. This includes your employees, clients, vendors,
creditors, landlord, banks where you have business accounts,
and so on. Also, you will need to cancel licenses, permits or
names related to your business, products or services.
Paying off your creditors is the next step; this includes settling
your debts with banks, private financiers, customers, vendors,
IRS, and so on. If you are unable to pay some or all of your
debts, you will need to consider bankruptcy choices, and understand
how to best reduce the risk to your personal assets.
Guide
to business turnaround. Our recommended procedure.
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