After years of running your own bookkeeping practice, you are ready to retire and start the next chapter in your life. Unfortunately, ending a business is not as easy as locking up the office and just walking away. Many ramifications exist when you close up shop. You will have to deal with tax issues, informing your employees of your intentions, and notifying your clients.
Regardless of the type of business entity you have, there are certain things you can do make the dissolution process easier. Before you start the process, consult with an attorney in the New York areas that has experience in business law.
1. Adhere to the business articles
If you are a sole proprietor, you will not need to worry about following a predetermined closing procedure. However, if your business has documents such as a partnership agreement or articles of incorporation, that cover the rules of dissolution, you will need to follow these procedures to close out your business.
2. File the necessary documents
Sole proprietors may not need to file any documents with the state to dissolve a business. Businesses incorporated in New York will have to submit the appropriate documents of dissolution. Filing with the state will put any creditors on notice that the business is closing and is no longer able to take on any more debt.
3. Inform the IRS
File all of the appropriate tax forms with the Internal Revenue Service (IRS) and any other local tax agencies. You will business will still be considered active unless you file the necessary forms and pay any outstanding tax liabilities.
4. Terminate your permits
File the paperwork to cancel any business permits or licenses you have. This will stop other people from fraudulently using your business's name for their own gain. If someone is able to run another company using your business information, you could end up owing taxes and fines for that business.
5. Inform your creditors
Let your creditors know that you intend to dissolve the business. Also, inform vendors, suppliers, insurers, and any other service providers of your intentions. You will need to work with them to close out your accounts and pay any outstanding debts.
6. Accept or reject creditor claims
Once you have notified your creditors that you are closing the business, they will begin to send claims for any unpaid items. You will need to examine the claims and either accept or reject them. This will be a good time to consult your attorney. Legal counsel can advise you on what claims you can reject and what type of reasons are valid.
7. Collect debts
Try to collect any money still owed to the business. Whether it is unpaid client invoices or refunds due from a creditor, take the time to focus on your collection process and recoup as much as possible.
8. Notify your stakeholders
Inform anyone that will be affected by your business closure. This might include the proprietor that you leased your office space from, clients, and your employees. Be considerate and make sure you are giving people enough warning of the closure. Your employees will need to find other jobs and your clients may need referrals to other bookkeepers.
After you have settled all of your claims and you no longer have any outstanding debts associated with the business, it is time to liquidate. You will need to sell office furniture, equipment, and any other property owned by the compa ny. If you have partners, you need to distribute the proceeds to them according to their ownership percentages dictated by the partnership agreement.
10. Hire an attorney
Dissolving a business in New York can be very complicated. An experienced attorney can help you through the entire process.