Business owners spend a great deal of time planning how to start, run and manage their businesses. But too often, they don’t plan how they will end it. Depending on your business structure and the circumstances surrounding the change, closing, selling or transferring a business can take from weeks to years.
Preparing for the Future
In your bylaws or governing set of rules:
- Detail the key personnel who have a say in exiting the business
- Document any terms or conditions for dissolution
- State any conditions as to who makes the decision and how it is made
Seek Professional Advice
At any point in the planning or dissolution process, you may need expert counsel from:
- A lawyer
- A CPA
- A business broker or valuation expert
- Auctioneers
- Tax experts
- Bankers
- The Internal Revenue Service
Perform a Valuation
Placing a value on the company should be a routine part of doing business, and it’s vital if you are considering a merger or sale. It is also necessary if you want to secure a loan or for tax purposes.
To valuate your business:
- Prepare a list of assets and a physical inventory
- Create a method for valuation that is in compliance with IRS standards.
- Thoroughly analyze several years of business operation and forecast the industry’s future, the economy and the state of the marketplace
Selling Your Business
Types of sales:
- An acquisition refers to the purchase of one company by another. (A merger happens when two firms join to form a single new company rather than remain separately owned and operated.)
- Initial Public Offerings (IPO), which occurs when a company first sells shares to the public.
If you’re considering selling:
- Review IRS publications regarding partnership and corporation interests and liquidations
- Consider using a business broker or mergers and acquisitions professional to help sell the company
- Create a checklist of items that for the sales agreement
Once you’ve sold:
Use the change form to end your tax liability with the City. Call 215-686-6600 or email if you have questions.
For more information, visit the Small Business Administration. [http://www.sba.gov/smallbusinessplanner/exit/sellyourbusiness/index.html]
Filing for Bankruptcy
Declaring bankruptcy is sometimes the only choice. Proceedings begin when you file a petition with the bankruptcy court, which results in the creation of a bankruptcy estate – all the legal or equitable interests that a debtor has at the commencement of a bankruptcy case.
- Read about bankruptcy on the IRS website
Closing Your Business
Closing your business can involve as many steps as opening one.
- IRS checklist
- Information on asset liquidation
- Report the business’s close to the Department of Revenue with the online form