For business owners, especially those who are running small shops, there may come a time when they will need to close up shop. And there are many reasons behind it. It could be because they want to start another venture or they are planning to preserve their assets.
It can be a stressful time, especially when things get messy. There are some business partners who end up parting their ways in the front of the judge and court reporters because of misunderstanding. This is something that you will want to avoid. To do away with conflicts and facilitate a smooth process, there are a few things that you need to prioritize.
Below are some of the pointers to keep in mind when you’re about to close your business:
Check the internal bylaws
You cannot just close your business easily even if you’re the founder or the CEO (though it’s possible if you’re the sole owner). You need to remember that you have partners and stakeholders, and all of you should arrive at a mutual decision. All of you must refer to the bylaws of the corporation or business, as such agreements detail the grounds for dissolution and the procedures to complete it. And should all of you decide to proceed with, the entire process must be documented properly.
Notify your suppliers and creditors
When your business is in the process of being dissolved, you should start notifying your creditors about it. This is because they may still have claims from your business. Before your fully close the business, you and your creditor must agree to settle the claim at a lesser amount than the original. But this will still depend on your state laws and regulations. In case the reason for business is the inability to stay financially afloat, you may file for bankruptcy to protect your personal assets.
Divide the assets
You might have dealt with the claims of your creditors. The remaining assets should be properly divided among the shareholders. For instance, if you own 50 percent of the business and the remaining 50 percent is divided among your partners, then it must follow that half of the total amount of assets shall go to you. You should also check your internal bylaws for other procedures and provisions. Nevertheless, the distribution of assets should be made known to the Internal Revenue Service (IRS).
Work with a corporate lawyer
Sometimes, things may get muddy and awry during the dissolution process. With that, you may want to bring in your company’s corporate lawyer. However, there may be a conflict of interest, so it may be wise to work with a third-party law firm specializing in business laws. This measure will help keep fights from blowing up.
Part ways peacefully
The dissolution of a business can be stressful and quite challenging. But you need to remember that it is also giving you a new lease on your corporate life. As much as possible, part ways peacefully. Who knows, you will find yourself working with your former partners.