Exiting a Business
Exiting comprises processes such as the closure of business; change of ownership through sale; bankruptcy and insolvency and succession.
Closure of Business
Closure of Business means you are going out of business. It implies the existence of your business ceases to be. However, the closing of business can be as tedious as starting up a business. There are a few points you must take note of before closing down a business:
Assets include outstanding stock; work tools and equipment; property; vehicles; business name; and licenses. They are usually disposed of upon business closure at a discounted price or the average regulated market price. The proceeds may be used to settle debts and fulfil certain legal obligations.
This step is crucial. It has to do with sending notifications to clients, employees, contractors, and suppliers. It would absolve you from further legal responsibility and makes the process easier for all.
Before the closure of any business, you must conclude all contractual obligations such as payment of wages or salaries, entitlement or termination payments etc. Also, in case of any existing leasing obligations, it must be concluded beforehand.
Without fulfilling your duties to the Government; no one can process your request for closure.
A sale is another form of ending a business. It is sometimes known as change of ownership. Sale of business is a contractual agreement that is binding. Hence, you must take your time to finalise your decision.
Furthermore, it is advisable to seek professionals' help (It could be a broker, accountant or solicitor). These professionals, for instance, brokers are in the business and thus would help you make the right decision concerning all aspects of the sale. Nonetheless, you must verify the details of any person who claim to be a professional.
Change of ownership often involves valuation; settling legal and tax issues; negotiations and paperwork that transfers possession and right to the buyer.
Bankruptcy is a legal state you assumed when you are unable to pay debts owed to your creditors. It prevents further harassment from your creditors. It, however, applies to individuals and not a business. Hence, bankruptcy doesn't apply to companies nor corporations. There are two ways to go bankrupt, which are through self-declaration of your creditors. In cases like this, it is best to contact a professional. You may issue a declaration of intention or sign a debt agreement for protection against court charges. Bankruptcy may have effects on your income, business and freedom.
On the other hand, insolvency applies to a company.
Succession entails a plan for your business. It merely answers the question- how it would pass on?
A good succession plan creates an easy avenue to go out of business. It contains:
Usually, the successor is a family or friend or some contractors who are interested in buying.
The business is valued at a particular price considering to present and future circumstances.
This issue sorts out the transition process. That is when the owner would transfer possession alongside ownership.
The succession plan must be detailed, acknowledging every fact.