Exiting

Exiting

Analysis of business graphs
Successful business people shaking hands closing deal

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:

Asset Management

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.

Information Dissemination

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.

Ending Contractual Obligations

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.

Conclude All Tax and Legal Obligations

Without fulfilling your duties to the Government; no one can process your request for closure.

Change of Ownership Through Sale

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 and insolvency

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.

Deal has been closed in business
Getting closer to a solution
Stay close, stay connected
Woman closed eyes and resting during a break

Succession

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:

• Name of Successor

 Usually, the successor is a family or friend or some contractors who are interested in buying.

• The Worth of the Business

The business is valued at a particular price considering to present and future circumstances.

• Finance and Operation Management

This issue sorts out the transition process. That is when the owner would transfer possession alongside ownership.

• Legal Obligations etc.

The succession plan must be detailed, acknowledging every fact.

© limitedcompany. 2021 All rights reserved.