How do you close a small business?


Quick Answer

Close a small business by getting expert advice, filing dissolution documents, and canceling registrations, permits, licenses and business names. Also, comply with employment and labor laws when closing the business and resolve any financial obligations.

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How do you close a small business?
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Full Answer

Sole proprietors can decide for themselves whether or not they want to close a business. If the business is a partnership, corporation, or limited liability company, or LLC, however, the decision must be made among the co-owners. The entity is then dissolved according to the guidelines established in the articles of organization.

Professional help, such as lawyers, accountants and tax experts, is recommended when closing a small business because it is a multi-step process. If the LLC or corporation is not legally dissolved, taxes and filings can become outstanding issues. This is why notifying the government and creditors of the business' status is a good idea.

Cancel all permits and licenses that are no longer needed. Doing this protects the owner's finances and reputation. Make sure that final pay-checks are paid to the employees as well, according to state laws.

Finally, resolve any financial obligations by researching tax responsibilities, notifying all creditors and lenders of the change, settling any debts and closing out business bank accounts and credit cards. Keeping records of everything may be legally required, especially for taxes and employment.

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