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Small Business: When It's Time to Close or Sell Your Business

February 28, 2012 | Comments: 0 | Views: 211

As a small business owner, you've put your heart and soul into your business -- but it's important to recognize and respond to those game-changing events that mean it's time to step away from your business, either by closing or by selling your business.

Here are a few signs, both positive and negative, that it's time to move onto your next business venture.

Someone gives you an offer you can't refuse.

Whether or not you're even in the market to sell your business, it's possible you could be approached by a potential buyer who wants to pay you a lot of money in exchange for your business.

You might initially think, "No way -- I can't let go of my baby!" But curb your knee-jerk reaction enough to consider the possibilities now presented to you. Rather than seeing this as an end to your entrepreneurial journey, look at this as an opportunity to either reinvest or recreate.

If the terms of the sale are agreeable, you could have a lump sum of money at your disposal to start that other business you've been thinking about. You've obviously done something right this first time -- ask yourself if you'd like the opportunity to try it again!

You smell the winds of change in your industry.

There are countless situations where your industry could be about to make some major changes, changes you're not sure you're prepared to deal with, and you might make the decision to close your business.

Whether it's new technology, more stringent government regulations, or market changes, your business could go from profitable to stagnant. If you see that day on the horizon, you might decide to position yourself at the edge of the curve so that you can adapt -- or you might decide to do what it takes to get out now, rather than wait to be edged out later.

You've reached your goals.

If you started this business thinking that you'll sell once you reach a specific milestone, and you've reached it, it's either time to revisit your goals and priorities, or act on your initial goals.

For some business owners, you may have reached your personal goals, but the company has real potential to expand under different ownership. You might want to see the company move up, but you might recognize that you're not the one to move it there. This is the perfect opportunity to take the profits from the sale and do what you do best -- start another business! Wash, rinse, repeat.

Your heart isn't in it anymore.

With any continuous passion, including running a business, burnout can be a real threat.

You probably started this business because you love it. But if that love isn't there anymore and you're feeling trapped, it might be time to escape and start anew, whatever that might mean. Maybe you want to start another business; maybe you want to invest carefully and retire; maybe you'd like to return to the days of standard employment. Whatever it is, running a business you're just not interested in anymore can definitely take it out of you.

What do I do now?

If you're ready to sell, there are a few things you'll need to get in order:

Previous three years of balance sheets and profit/loss statementsPrevious three years of tax return statementsThis year's profit/loss statement, to dateList of other business assets (equipment, furniture, property, etc.)List of vendor, affiliate, and supplier contractsList of any leases or property agreements

If you're thinking about closing your business, there are different steps to take -- and it's important that you close your business by taking the proper actions, or you could be responsible for paying taxes on a business that's no longer operational/profitable.

Here's what to do:

Inform the IRS that your EIN is no longer connected with a live businessFile dissolution paperwork with your Secretary of StateCancel and business licenses or permits you may have obtainedCancel any DBAs or Fictitious Business Names your business may haveWrap up your tax responsibilities and alert the state tax office of your closurePublish any required legal notices of your dissolution in a county newspaper

Talk with your accountant or legal advisor

Closing a business is one of the most important things to do right the first time -- any required filings left unfiled could potentially leave you open to fines, fees, and taxes on a business that isn't in the market anymore. Discuss your options carefully with your lawyer or accountant, and make absolutely certain you've crossed off every item on the to-do list, whatever you decide to do.

Sarah Kolb,

Since 2000, Click Industries, Ltd. has been helping thousands of small business owners, independent entrepreneurs, writers, and musicians start new businesses, protect their intellectual property, and stay informed with our regularly updated Small Business Blog.

Source: EzineArticles
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