After putting in years of dedication, time and hard work, it often becomes time for a business owner to step away. Each year many businesses change hands or close their doors for various reasons. Owners decide to retire, pass ownership to their children or other trusted partner, or merely wish to embark on a new endeavor.
These owners must follow several necessary steps and procedures to properly cease operations or sell their business, and many items must be addressed before either process can be completed.
PREPARING TO SELL A BUSINESS
There is a plethora of items business owners must consider carefully as they plan to sell their businesses. The U.S. Small Business Administration (USSBA) suggests owners take into account and contemplate:
- Obtaining a business valuation from an outside source to properly gauge offers from buyers
- Ensuring all accounting information and previous finances are in order to make a first-rate impression
- Make certain incorporation documents, permits, contracts and other legal forms are up to date and readily available
- Prepare a current inventory of assets and other business merchandise to prepare for a merger or acquisition
This list is clearly not exhaustive. However, it demonstrates the depth of information required to properly change a company’s ownership, as well as the complexity involved in these deals.
PREPARING TO CLOSE A BUSINESS
Instead of selling a company, many owners simply decide to close and shut down their businesses. As stated by the USSBA, many key factors must be considered for this as well:
- While sole proprietors may choose to close by themselves, LLC’s and partnerships require joint action
- Ensure full legal dissolution to avoid tax and filing liability down the road
- Fully comply with applicable employment and labor laws such as paying final employee wages or other accrued benefits
- Properly cancel permits, licenses, registrations and business name(s) with the appropriate authority
- Consider plans to appropriately liquidate the company’s assets
Again, other issues must be addressed before closure can be official. If an owner or partner is considering selling a business he or she should contact an experienced business law attorney to discuss options and ensure adherence to all necessary steps.