Deciding to close a business is always difficult. Many young entrepreneurs depend on their businesses to make ends meet, and having to close the door on it can be devastating. Nevertheless, it does happen, either because the business is no longer making enough money or because the owners do not have the time to devote to its operation.
The process of closing down a business is a long and sometimes complicated one. If you’re considering closing your own business, here is what you should do to make the process move forward as smoothly as possible.
Vote to Close the Business
If you’re the sole proprietor of your business, the decision to close will be yours alone. However, if your business is a partnership, a limited liability company (or LLC) or a corporation, you and your co-owners will have to come to the decision to dissolve the company, usually through a vote. The decision should be clearly documented in writing.
Get Professional Help
Since closing a business is a complicated process, it’s important that you seek the advice and assistance of a professional to make sure you’re taking the appropriate steps and all of your bases are covered. A business law attorney in Pittsburgh will be able to help you with this, making sure all the necessary paperwork is in place.
File the Necessary Dissolution Documents
If your business is a sole proprietorship or a partnership, you may not need to file any documents to formally dissolve your business. On the other hand, you will have to do this if you have an LLC or a corporation. Failure to file dissolution documents means that you will continue to be responsible for taxes and filings related to your business. A Pittsburgh business lawyer will be able to tell you more about these documents.
Even if your business doesn’t need to be formally dissolved, it’s still a good idea to contact the government and your creditors to inform them that your business is closing.
Cancel All Licenses and Permits You No Longer Need
Canceling any permits and licenses that you needed to run your business will help protect your finances and reputation. It will also prevent anybody else from using your business’s name or seller’s permit and forcing you to pay unnecessary taxes and suffer penalties.
Ensure All Employees Are Paid
You should make sure that all of your employees receive their final paychecks either on their last day of work or shortly after depending on the laws in your state. You will also need to inform your employees that your business is closing. According to the Worker Adjustment and Retraining Notification or WARN act, any business that employs 100 workers or more will need to provide at least 60 days’ notice before the business is closed.
Resolve Your Financial Obligations
When you file your income tax return for the year your business closes, make sure to indicate that the document is a final return. You will also need to close your Employer Identification Number or EIN account by contacting the IRS. This will ensure that the number will not be used in the future.
Maintain All Necessary Records
You may need to keep all tax and employee records related to your business, even after it has closed. The amount of time you will need to keep these records will depend on your state, but expect to maintain them for three to seven years.
Choosing to close down your business is never an easy decision. Don’t let your emotions derail your process — contact the legal counsel services of Allegheny Attorneys at Law. Our team of business law attorneys can make sure all of your best interests are accounted for, helping you complete all the necessary paperwork and filing to terminate your business’s operation. Call our Pittsburgh business lawyers today to schedule your free consultation to receive expert advice on the next steps for your business.