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Time to close up shop? Here’s how to do it

Whether your business is struggling financially or you’ve decided it just isn’t what you love to do anymore, if you’re closing down, there are some things you need to know. Hanging a closed sign on the store isn’t going to cut it — there are contracts with employees, obligations to creditors, tax implications and more to figure out before you can actually bid farewell.

Here are some of the basics:

  • If you are in a partnership, you’ll first need to let everyone know your intentions. This may involve very specific steps that were outlined in your partnership agreement. Sole proprietors don’t need to worry about this, obviously.
  • File the requisite dissolution paperwork with the state letting it know you are terminating the business. This will stop you from incurring new debt or taxes.
  • Tell the IRS. You’ll need to square up with Uncle Sam for any previous taxes (including payroll tax) and let the IRS know that you’re shutting down.
  • Notify creditors that the company is dissolving and that they must submit claims within a certain period of time. You’ll need to settle these claims, either by paying or working out a deal with the creditor.
  • Collect. Just as you’ll pay creditors, you’ll want to collect and debts owed to you.
  • Distribute assets. You’ll want to sell off assets. This can include physical things like products/store displays or intangible things like trademarks.

If you are closing a business and run into issues like stockholder lawsuits or a partnership dispute, an attorney may be able to help.