As some San Diego businesses have withstood the recession well, others have seen profits drop or may even be struggling to keep their doors open. If your business falls into the second category, you probably haven’t been able to escape the question: Should you close your business? It may be possible to ride things out until the business becomes profitable again or try to turn things around by changing your business model, e.g. promote a new marketing strategy or introduce new products/services. But financially, these options may not be available to you, and it might be time for you to move on to another investment or career.
Every business needs to be evaluated on its own merits, but in his Brighthub.com blog, contributor W.A. Swan identifies seven signs that can help you decide if it’s time to exit your business. Among the warning signs:
- You can’t afford to advertise, which means you probably won’t be able to bring in the new business you need.
- No matter what you try, your sales are simply not improving.
- You’ve dropped key inventory, supplies, or services offered because you can’t manage to pay for them anymore.
If you decide to close your business, remember that winding up doesn’t mean just selling your business’s assets and calling it a day. While this may seem like a quicker way out, the potential consequences may be more costly than getting things done right the first time. The steps for terminating your business will depend on how your business is set up, for example, is it a limited partnership, corporation, LLC, or a sole proprietorship? To start the termination process, many businesses need to abide by the rules set out in company documents, such as your Articles of Incorporation or Organization and By-Laws. We’ll also work to settle any disputes that arise among business partners, and advise you of your rights in termination, and in dividing assets and liabilities.
Next, you must follow all legal requirements for shutting down your business to avoid facing potentially greater liability even after you stop operating your business. Under certain circumstances, your personal assets may become liable for business debts. California and federal tax issues need to be evaluated early and before assets are sold, and local permits and licenses should be cancelled as well. Protect your financial interests when closing your business by contacting San Diego Law Firm. We’ll handle the legal steps required to close your business or sell your business. You can then move on with greater security after you’ve exited your business, and minimize the chances of being sued or held personally liable post-closing. Reach San Diego Law Firm’s experienced business law attorneys at (619) 794-0243.
