Are you considering a business dissolution but aren’t sure how to go about it?
A business closure can happen for many reasons. The company may not be making enough money, or you may be retiring (or have other personal reasons). Or perhaps you no longer feel that the business is sustainable.
Knowing the signs to look for that it may be time to shut down your business – and the steps you must take to go through the business closure – can save you stress, time, and money.
Here’s everything you need to know.
What You Need to Know About a Business Dissolution
Knowing the signs to look for that it may be time to close your business can make the whole process a much smoother and easier one.
It’s a hard decision to close down a business – but there are many telltale signs that it’s time to shut down. Whether you’re no longer feeling fulfilled by the work, the business’s financials are poor, or you are going through other legal or personal issues, knowing when to shut down your business can save you money, time, and stress.
Here are some more signs that it may be time to close your business.
Negative Net Profit
Owning and operating a business is about making money. If your income statements are poor and you have a negative net profit, it is a critical sign that you may need to start considering the shut down of your business.
If your net profits are constantly negative and you’ve tried multiple different tactics to improve them, it could be a sign that your business will not survive long term.
If you have consistently been trying to see positive revenue numbers and improve your net profit but are not seeing improvement, it may be time to consider a business dissolution.
Your Personal Health and Happiness
If you find that your health is deteriorating because of the long hours you put into your business, or your stress levels have gone through the roof and are negatively affecting your personal life, it might be time to call it quits.
Running a business isn’t easy – whether it’s a startup or a long-term business. It can be highly stressful and, at times, daunting. If you are starting to experience health issues like fatigue, anxiety, stress, lack of sleep, or more, it may be time to put yourself ahead of your business.
If your health is no longer becoming manageable and you find that you no longer enjoy running your business, take a step back and evaluate whether you still want to be running the company. Are you taking your work problems home with you? Can you remember the last time you felt stress-free or happy?
If your physical and or mental health is deteriorating and you no longer feel passionate or happy about what you do, consider if a business dissolution would be the right decision.
Steps You Should Take to Shut Down Your Business
If you finally decide it’s time to shut down your business, follow these guidelines to ensure the process is smooth.
Create a To-Do List
When you decide to close your business, you must create a to-do list of all the things you have to finish. What projects do you have in progress that you or your team need to complete? Are there any outstanding contracts?
Create a list of everything you have to do. If you cannot fulfill certain obligations or complete specific contracts, check the contracts for cancellation fees. Put an end to all operations, including marketing, and take the next step to inform your employees and customers.
Inform Employees and Customers
When you decide to shut down your business, advise your employees and current customers as soon as possible. They also have a right to know that you are closing your business – especially your employees.
Giving your employees advance notice that you are closing your business gives them time to search for other work or make the right financial decisions to ensure they are secure until they find new employment. Offer them reference letters and let them know their responsibilities during the shutdown.
Sell Assets and Close Accounts
If you have leftover assets or inventory, now is the time to sell them. The profit you get can pay off any bills or debts you still have. You should also focus on closing your accounts and submitting your final taxes.
You should also always consult with your attorney or accountant to ensure the closing process goes smoothly and you haven’t missed anything.
Closing a company is not an easy business decision – if you’re considering closing your business, it is critical to do it correctly. Consult with an attorney to ensure you are making the right decision and to also ensure that you follow all the steps for a smooth shut down.
Hire a Legal Expert if You’re Considering a Business Dissolution
When it comes to business closure, you must take the right steps to ensure the closure is managed properly. Your decisions today could impact you for years to come — with good or bad results. Hiring a legal expert can help ensure the closing down process goes smoothly while also protecting you from disastrous errors.
Need a lawyer for your family business? Call 303-780-7333 or schedule an appointment for a free consultation.