Let's face it, not every small business makes it in today's economy. Sometimes, a business simply isn't profitable enough to remain open. In other situations, the owner may no longer want to run a business due to certain circumstances. Whatever is the case, many small business owners are left wondering how to close down the business. Unfortunately, it is not as easy as just shutting the doors an putting up a sign. There are several steps involved to formally close a business.
A Few Considerations
Dissolving a business of any size is often more complicated than it seems. This is especially true when there are several different stakeholders in the entity. It is also possible that there is a partnership or operating agreement in effect. Each of these situations can complicate the matter even further. Thus, it can be a good idea to work with a business law attorney to ensure that all the appropriate steps are taken.
Even if you don't have a business agreement in place, there are still laws that you must abide by. In Utah, the Department of Commerce has several different regulations that address this matter. You may also need to clear the closure with the Utah State Tax Commission prior to the termination date.
The Notice Period
The first step in closing a business is to notify any party that has an interest in the matter. As discussed above, this will involve contacting several different state entities. However, you will also need to notify third parties, such as creditors, to take care of outstanding debts. These creditors include suppliers, lending institutions and service providers.
The purpose of the notification period is to allow creditors to generate a final claim. Any amount owed, even contract penalties, may be submitted during this time. Your business remains responsible for resolving these debts before you officially go out of business.
Sometimes, contract disputes can arise during this period. Business contracts can be complicated, so it is recommended to work with an attorney that handles contract litigation. Hiring an attorney can help you negotiate with creditors during the winding down window. This could help you minimize the costs of closing.
Dealing With Asset Issues
Most businesses have assets that remain after claims have been paid. These assets may include real property, equipment, supplies or even vehicles. Since these items are still considered to be business property, a formal distribution needs to take place. Business owners may agree to divvy up the property. Alternatively, some business owners decide to sell off the property and split the proceeds.
Wrapping Up Your Company
As you can see, there are several things to think about before shutting your doors. It helps to have legal counsel during this process to make sure that all the details are covered. You don't want to close your business only to find out years later that some type of liability still remains.
In Utah, you can contact T.R. Spencer Law Office for assistance. Get answers to all of your questions regarding dissolution, contracts or debt collection.