Making the decision to close a business can be a difficult step to take. Whatever the reason behind the choice, business owners should take the time and effort to ensure that they close their businesses properly.
When companies close, it is essential for business owners to create a plan that gives them and those closest to the company the greatest amount of protection possible. An Illinois business attorney understands that when businesses simply close their doors and ignore the rest, it can result in years of trouble for all involved.
Although it can take considerable planning, effort and time, closing a business the correct way gives business owners, customers and creditors all the best possible outcome in an otherwise less than ideal situation. Business owners who have made the decision to shut their doors should consider these three things as they go about the process of closing.
Know the business’ tax liability
When businesses close, an Illinois business attorney understands that their existing tax liability does not simply disappear. It only ends when the taxes have been paid. To make sure that the taxes are completed properly, business owners should verify with the IRS all forms that need to be completed, in what order and whether there are specific deadlines for filing.
According to IRS.gov, the owners of closing businesses must file an annual return for the year in which the company shut its doors and indicate that it is the final return. It also advises that returns must be filed to report disposal of business property and the exchange of like-kind property. Additionally, if the business had any employees, owners may risk personal liability if they do not obligate payroll tax responsibilities.
Settle or pay off debts
Being upfront and honest about closing is the best way to handle creditors. Businesses should notify all lenders and creditors of the plans to close with fair notice. When this is done properly, it limits the amount of time that creditors can seek repayment. Those who cannot pay their debts may wish to consider bankruptcy.
Comply with all employment and labor laws
Business owners should always comply with employment and labor laws, even when their businesses are closing. Employee wages are to be paid no more than 13 days after the end of a pay period, and employers are prohibited from lowering wages after the fact. The federal Worker Adjustment and Retraining Notification Act requires employees with 100 or more workers to give their employees at least 60 days advance written notice of the closing.
One of the best protections business owners can give themselves during this process is complying with all laws and regulations for local, state and federal governments. This can be a lengthy process, so business owners may find the knowledge and experience of an attorney helpful. Those who need assistance with closing their business should contact an Illinois business attorney as soon as possible.
