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Need to Close Down a Business? Here’s What to Do Next

How do you know when to close your business? Sometimes you may find yourself facing difficult decisions regarding the closure of your company, whether it’s because you can no longer keep up with your competition or because the demand for your product has dropped off, resulting in losses and an inability to pay off your debts. In these cases, as with many others, it can be beneficial to hire an accounting service to help you through the company liquidation process so that you don’t have to go through the ordeal alone.

3 Options for Liquidating Your Company

If you need to shut down your company, you can do so by filing for bankruptcy, winding up your business affairs or liquidating your assets. Your course of action depends on whether you have debts, who is involved in your business and what happens to your employees after closure. Filing for bankruptcy is typically only an option if you’re not personally liable for any debts. To learn more about deciding which option is best for you, click here. In each case, it’s important that owners protect themselves from personal liability before beginning their dissolution process. However, if you have limited experience handling these matters and are in need of professional help or information regarding company liquidation, we would be happy to assist.

Sale

Selling your business is another way that you can retire from it. There are a few different ways you can go about doing so, including going public on an exchange or selling off ownership of your company piece by piece. Just be careful not to sign away all your rights, especially if you’re looking for full retirement. Some things, like patents and products in development, should never be sold because they are too important for your company’s continued success.

Winding Up

After your company is placed in liquidation, you’ll need to submit some final documents before winding up and shutting down for good. Depending on your circumstances, these can include

Voluntary Liquidation

A company may choose voluntary liquidation, if it can’t pay its creditors and has insufficient assets to repay them. In some cases, one of two qualified insolvency practitioners will apply for liquidation on behalf of a business; in others, directors must pass a resolution asking members to vote on whether they want their company to be liquidated. A company then needs at least 75% of its members (or shareholders) to vote in favour of liquidation. The process usually takes around four months from start to finish—as long as it takes for creditors’ claims and other liabilities due before voluntary liquidation are met.

Tips for Liquidating Your Company

When it comes time to close your company, you need professional help. A liquidator will know exactly what needs to be done and how best to handle situations like repaying taxes or employees. And they’ll have connections with vendors, making it easier for you to sell your assets quickly and get rid of any money that might be left over at no cost to you. Make sure you can afford a liquidator—they charge between 15-20% of sale proceeds—and shop around for one before deciding on one.