Small Business Horror Story #6: Not Properly Closing Your Business
Today I received a call from a potential client who was called before the Nevada Department of Taxation about $60,000 in taxes, penalties, and interest he owes from a business he stopped operating in 2009. Apparently he simply closed the doors of the business and changed his address. Three years later he’s on the hook for this money partly because he failed to request the Department of Taxation cancel his tax permit.
When you’re closing up shop, it involves far more than just closing the doors. Here are just some of the things to consider when shutting down your business in order to avoid personal liability…
- Follow any termination or dissolution protocol outlined in an owners’ agreement,
- Make sure all your debts are paid or that arrangements have been made to pay them,
- Ensure the any licenses you’ve needed for the business are properly canceled,
- Notify any relevant agencies that your business will cease to operate and find out the proper steps for canceling any licenses,
- File the proper paperwork with the Secretary of State.
Just as there are steps to follow in starting a business, there are steps to follow in closing one down. Make sure you tie off all loose ends so that you don’t get a surprise call from some government agency looking for money.