The end of one year and the beginning of a new one always brings big changes. If you own a business that is currently inactive, one change you may wish to make is formally shutting down your business. The end of the year can be the perfect time to dissolve a company. This can be a gut-wrenching choice, but it leaves the door open for exciting new ventures.
When you close down a business, it’s not as simple as flipping the sign on the door to “closed.” Dissolving a business requires several steps—and to do it by the end of this year, you should act quickly.
Formally dissolve the LLC or corporation
Your first major step is to shut down the legal entity. You will either need to vote with your businesses associates to dissolve the business, or receive approval from your Board of Directors. After this, follow your state’s requirements for dissolving your LLC or corporation.
Pay your outstanding bills
To formally close your business, it is necessary to pay any outstanding debts. Companies are usually required to settle any outstanding debts before they can distribute their assets.
Cancel any licenses or permits
You will need to cancel your business license, as well as any other permits for your business. It is important to actively cancel these rather than passively letting them expire: If your county finds out that your business is inactive, you could be charged a hefty fine.
Contact your clients, vendors and contractors
During the process of shutting down, remain in touch with the parties you do business with, such as vendors, partners, clients, suppliers and contractors. It is both professional and courteous to keep these parties informed about your company—if you simply go dark on them, you could lose important business contacts.