Pathways to closing your business
From Northwoods Commerce Magazine
By Michelle Madl-Soehren
Have you ever asked yourself how many “final” chapters you have written in your life, only to pursue something new and different…to begin a new story, be it personal or professional? I’ve spent countless hours over the years sharing in public forums, as well as one-on-one consulting situations, the steps involved when one wants to start a business. But what if an entrepreneur has been thinking of closing his or her business, or perhaps wanting to sell it, liquidate it…get out of it, for whatever reason that may be?
I thought this was an interesting topic and one worth exploring. I began my research, read articles and pooled together information from various useful resources that may be helpful to you if you are thinking of hanging the “CLOSED” sign on the door of your business…indefinitely.
Just as I try to drive home with potential launchers the value of a well-written business plan, a proper exit plan can make the transition to dissolve a business a much smoother process. As noted in an article I found on the Small Business Administration (SBA) website, sba.gov, following a step-by-step process will help alleviate some of the pain of change that is bound to come in the planning process. Steps suggested by the SBA included:
Decide to close a business
Although it seems as though it’s an obvious statement, more often than not, an entrepreneur who is considering closing a business may spend the first five or 10 years talking about closing. Closing can often be just as scary as starting! As a sole proprietor, there need not be anyone else involved with the decision to close up shop; however, if your business is a partnership, limited liability company (LLC) or corporation, you will need to consider your partnership. You will want to refer to the guidelines established in your articles of organization with respect to dissolving the business entity and document the final decision in a written agreement.
Obtain expert advice
In order to ensure that the business closure is handled smoothly and legally, you will want to enlist the professional assistance and expert advice that may come from lawyers, accountants, business brokers, auctioneers, tax experts, bankers and, of course, the IRS.
File dissolution documents
As noted by the SBA, if you fail to legally dissolve your LLC or corporation, you will continue to be liable for taxes and filings. As a general partnership or sole proprietor, you may possibly not be required to formally dissolve your business, bearing in mind that it is a good idea to notify the government as well as creditors of the change. Small business attorneys can advise whether or not filing dissolution papers is necessary and/or recommended.
Cancel registrations, permits, licenses, and business names
Canceling licenses and permits that are no longer needed will protect both your finances and your reputation. You can cancel your business’s trade name registration with your local government.
Remain compliant with employment and labor laws
Do you have employees and if so, have you notified them of your intent to close? You will want to follow up with Wisconsin state law with respect to the time frame in which you must notify employees of their last day of work and ensure that final paychecks are paid by that date or soon after. Become familiar with any worker protection rules that may apply to you as a small business owner as well, such as the Worker Adjustment and Retraining Notification Act (WARN).
Clear up and/or resolve any financial obligations
With respect to taxes, you will want to consult with your accountant for guidance. Check the box indicated when filing your income tax return for the year in which your business closes, identifying that this will be your final return. Ensure compliance with payroll tax responsibilities. Inform state and federal tax agencies of your closure and let them know that you will cease to file unemployment returns as well as an employer’s quarterly tax form. In addition, you will also want to close your employer identification number (EIN) account. This can be done by contacting the IRS.
Notify all of your lenders and creditors of your plans to dissolve the business and make any necessary arrangements to settle any remaining debt as it relates to your business. Here again, consulting with your accountant, attorney and insurers will assure that you have all things accounted for.
As directly stated on the SBA website, you may be legally required to maintain records, particularly tax and employment records, even after your business has closed. A general rule of thumb for records keeping ranges anywhere from three to seven years.
There are some great resources available to business owners, regardless of size and business structure, who are considering closing their business and/or selling. The IRS can be a great resource and they provide a checklist of typical tax actions to take when closing a business, depending on your type of business structure. Visit irs.gov/Businesses/Small-Businesses-&-Self-Employed/Closing-a-Business-Checklist. General information (as well as the source of this article) is also available through the SBA at sba.gov/category/navigation-structure/starting-managing-business/managing-business/getting-out. In the state of Wisconsin, you can check out Wisconsin Worknet at Worknet.wisconsin.gov. You can find useful information regarding the dissolution of an LLC at northwestregisteredagent.com/dissolve-wisconsin-llc.html.
Change, I have been reminded quite often as of late, is inevitable. To every good story there is an ending and this is an ending for me, as this is my final article as contributing writer for Northwoods Commerce Magazine. Author Sonia Ricotti once said, “Accept what is, let go of what was, and have faith in what will be.”
Although I had been contemplating change over the last year, it was only this past January that my husband Lance accepted a position with a utilities construction company in DePere. At the same time, my 87-year-old mother, who also resides in DePere, confided, “I’m beginning to realize just how much I need your help.”
Without hesitation, I hugged my mother, kissed her and said, “It’s OK, Mom…I will come home.”
And so in faith, I made the very difficult decision to leave my career as business development specialist at Nicolet College at the end of June, put my home in Crandon up for sale and step down from my role as visionary leader of Northwoods Women in Business. I will be relocating to the Green Bay area later this summer, where I will begin my own business consulting venture under the name iMPACT³P, LLC. I will continue to work with entrepreneurs and solopreneurs alike.
It has truly been a pleasure writing for Northwoods Commerce Magazine and I wish to personally thank all of the readers of this publication, as well as the many that reached out to and confided in me because of something I had written in past articles.
May you continue to reach for the stars, trust your intuition, leap fearlessly, feel the abundance of your life and seek the positive in all things.
For more information about Michelle Madl-Soehren, visit her LinkedIn page at linkedin.com/pub/michelle-madlsoehren/14/772/521 or you can contact her via email at [email protected]