Starting a company is an excellent way to become a business owner and build wealth, but it comes with significant risk. Only 25 percent of businesses in the United States stay open for 15 years, and you need to prepare to liquidate your business in the future. Taking the proper steps to build a company will improve your odds of success, but nothing is guaranteed.
Knowing how to liquidate a company will prove beneficial should your business go under and stop providing goods or services to customers. The proper steps for liquidation will allow you to recoup some money before moving on with the next venture.
Fortunately for your finances, you've uncovered this practical guide to business liquidation for your company. Continue reading to move forward with your liquidation process with confidence!
Decide to Close
Closing your business if you're the sole proprietor, but things get more challenging if you're a co-owner. You'll need the other owner to agree to close down the company to proceed with liquidation services. Seal the deal with a written agreement between you and the co-owner to liquidate your company.
File Dissolution Documents
Now that you've agreed to close your business, you'll want to file the dissolution documents for your company. You'll continue facing taxes on your business if you fail to file these documents in the state your company is registered in. Your state's Secretary of State should provide more information on how you need to proceed with restaurant liquidations.
Cancel Permits and Licenses
Canceling permits and licenses is another crucial step in liquidating a company. This step protects your finances when you choose to shut down your company. You won't need these permits since you won't operate your business anymore.
Comply With Labor Laws
You must pay your workers what they're owed before closing your doors. Consult state and federal laws regarding employee payment when liquidating a business. You'll face severe penalties if you fail to pay your employees their hard-earned money.
Resolve Your Obligations
Most businesses have financial obligations to other companies and suppliers. You can only liquidate your business after you've resolved these obligations. Pay your final returns for business and income tax before liquidating a business.
After paying your taxes, cancel your Employer Identification Number. You'll be close to completing the process of liquidating your company.
Keep Your Documents
Document everything as you get closer to total liquidation. You'll likely need to maintain employment and tax records in the future. Having those on hand will prevent several future headaches.
Prepare to Liquidate Your Business Today
Taking steps to liquidate your business is a sad end to a once-exciting chapter, and you must take the proper steps for liquidation. Cancel your licenses and permits, and take care of all financial obligations. Pay your employees what they're owed and keep your tax and business documents ready to prevent future issues.
Are you ready to move on to the next chapter of your business? Read more of our engaging business and finance blog posts to learn more!