There are many reasons business owners close up shop, including retirement, starting a new venture or, hopefully, because they’ve won the lottery. No matter what the reason, it’s important to diligently wind down a business before dissolving your business.
Here are five steps to take:
- Reach consensus. If you’re a sole proprietor, then the only consensus you need is your own. However, if you’re a partnership, limited liability company (LLC), or corporation, you’ll have to reach a consensus with your business partners on how and when to dissolve. Make sure that everything is in writing (this cannot be stressed enough) and follows whatever guidelines are applicable to your articles of incorporation, bylaws, and other organizational documents.
- Seek counsel. Just as you would seek experienced counsel when starting a business, you should do the same when shutting one down. Dissolution is a multi-tiered process. Everything must be identified, addressed, and resolved. This includes canceling licenses and permits, as well as filing legal and tax documents with courts, creditors, and government authorities.
- Comply with laws. State law will generally require dissolving businesses to pay employees for any work performed up until the closing date as well as for any unused vacation, sick, or personal time. State law will also govern possible notice provisions under the Worker Adjustment and Retraining Notification Act (WARN) which requires at least 60 days advance notice to those who work for companies with 100 employees.
- Resolve financial obligations. All businesses have financial obligations that need to be resolved before dissolving. Those include:
- Business taxes. When you file income tax returns for the year in which your business closes, check the box that indicates the document is a “final” return. Many state revenue agencies require additional filings for sales tax as well.
- Payroll taxes. If you have employees, you must satisfy your payroll tax responsibilities or you will risk personal liability. Inform your federal and state tax agencies that your business is closing and that you will cease to file unemployment returns and an employer’s quarterly tax form.
- EIN accounts. Businesses should close their Employer Identification Number (EIN) account by contacting the IRS. The IRS cannot cancel your account, but closing your EIN account notifies the IRS that you are not planning to use the number in the future.
- Business debts. Notify creditors of your plans to dissolve the business, contact business associates to whom you owe money, and arrange to settle all accounts.
- Maintain records. Although your business may be dissolved, you may be legally required to maintain records for a certain number of years depending upon the applicable federal and state law.
There are many reasons business owners close up shop, including retirement, starting a new venture or, hopefully, because they’ve won the lottery. No matter what the reason, it’s important to diligently wind down a business before moving on.
Whether dissolving your business is a happy or sad occasion, it should be handled thoroughly. Failing to wrap up all loose ends can lead to years of frustration and possible litigation with former employees, vendors, and partners. We’d be happy to help you wrap things up and move on to your next venture. Call us at (480) 776-6055 today.
Forming a business can seem overwhelming – especially when you’re doing it alone. Creating a business plan will allow you to refine incomplete ideas, address areas you may have not yet considered, create a map so you know what to do next, and increase credibility for bank loans or investor funding.
While you may think you’ve got your business concept down pat, turning the idea you wrote down on a napkin into reality isn’t as easy as it might appear and many people get so caught up on how to start the process that the business itself never materializes.
Following this solid eight point plan, based on guidelines from the U.S. Small Business Administration (SBA), will help you get down to business, literally:
- Executive Summary. The executive summary is a snapshot of your business plan as a whole and touches on your company profile and goals.
- Company Description. The company description provides information on what you do, what differentiates your business from others, and the markets your business serves.
- Market Analysis. Before launching your business, it is essential for you to research the industry, market, and competitors. What’s working and what’s not working for your competitors? How will you distinguish yourself? Is there anyone else in your market? If not, there may not be money to be made.
- Organization & Management. Every business is structured differently, so it’s important to understand how your company will be organized and managed. What entity will you use? Who’s in charge of what, when? What kind of business succession plan needs to be put in place?
- Service or Product Line. Tell the story about your product or service. Describe what you sell and how it will benefit your potential customers.
- Marketing & Sales. Describe how you plan to market your business and explain your general sales strategy.
- Funding Request. If you are seeking funding for your business, make sure to include everything asked for in the plan. Any omissions may put your request at the bottom of the pile, or worse yet, in the garbage can.
- Financial Projections. Providing financial projections to back up your funding request is critical. Find out what information you need to include in your financial projections for the bank or angel investor.
It’s likely that you may not even know the answers to these questions. That’s okay. We can help you to refine your goals, map out your plan, provide the kinds of details needed to make your venture a success, and form your business entity.
Are You Prepared to Include the “Wow” Factor?
When forming a business, you may think your business plan is great; but don’t forget that most people think the same of their own business. The Wow Factor becomes especially important when you’re all competing for funding.
Make sure your plan has a “Wow” factor by:
- Explaining in very clear terms why your business plan is unique;
- Being clear about what you have to offer that’s different from your competitors (skills, experiences, relationships, etc.); and
- Defining how your business caters to a unique niche in the market, which areas are being ignored and what potential opportunities exist for your business going forward.
The bottom line is that you want to make your business plan stand out far above the rest – your plan needs to be well thought out, organized, and unique. Even if you don’t need outside funding, complete the business plan so you have a roadmap and the knowledge that you haven’t missed an important consideration.
Let’s Continue This Conversation
If you’re not used to drafting business plans, the task may feel daunting and you may be tempted to jump ahead. Don’t. We’re happy to help you with forming a business plan and make sure you have protections in place so that your business gets off to the right start. And, even if you’re already knee deep in your business, we’ll help you get all of your ducks in a row. Give us a call at (480) 776-6055 and get on our calendar.