Unfortunately, the pandemic has caused many businesses to fail. Yelp reported 60% of businesses that had closed at the start of the pandemic are not reopening. What’s more, in some cases, businesses may be viable, but owners just want to give up.
Important Tips for Closing Your Business
Whether by necessity or choice, owners need to take certain actions to shut down properly and avoid problems. Here are some actions to consider.
If you are incorporated or have a limited liability company, shutting your doors doesn’t end your legal status. You must dissolve the entity by following state law rules, which usually means filing articles of dissolution with your secretary of state. State law may require a vote by owners to dissolve the business. You won’t receive any state approval until all outstanding taxes (e.g., unemployment taxes) have been paid.
If you have a lease, you can just vacate the premises; the obligation to pay rent continues through the term of the lease. Most small business owners have co-signed their business leases, putting them personally on the hook for the balance of the lease term. However, you can work with your landlord to minimize your financial exposure and get out of lease.
If you have assets, sell them to raise the cash needed to pay employees and outstanding debts. Consider selling inventory to a remainder company that buys in bulk. “Fire sales” of other assets—display cases, restaurant