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Temporarily Closing Your Business; A Checklist to Make it Successful

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Temporarily Closing Your Business; A Checklist to Make it Successful

By JimD
Published: October 5, 2010

For many small businesses, temporarily closing the doors is
often less of a choice and more of a necessity. Whether you are closing for business or
personal reasons, efficient planning will come in handy as you slow down your
business activity, and again when yo;re ready to restart your business one day.

Plan Your Timeline

When temporarily closing your business, you will need to
figure out a timeline. Are you planning to close for a few months, a few years,
or indefinitely? The timeline is a crucial part of the checklist because it dictates
how much planning is necessary. Deciding on the duration your business will be
closed depends a lot on the reason why you decided to close your business. If
you are taking a few years off to go back to school full time, you may only be
closing your business for a few years. If you close due to health concerns, it
may be a few months before you feel like run your business again.

An option if you are stepping away long-term would be to
transfer your business to another person
. This is a good option if you have
a loyal customer base and you feel that you may want to come back in a few
years. It may be better for you to dissolve
your business
and then, eventually restart
your business
when you are prepared to do so.

Notify Affected Parties

Keeping affected parties in the loop will make temporarily
closing your business much smoother. You can come up with tailored list for
your business, but generally, there are five parties you will need to speak
with. Ask each of them if there is anything they need from you and explain how
you can be contacted if any concerns do arise.

  • State
    Government.

    To
    protect your finances and reputation, ensure that you cancel all licenses and
    permits that you will no longer need. Contact your state business licenses and permits
    office
    and tell them
    how long you plan on being closed. They would be able to advise whether you
    need to cancel and provide the appropriate cancellation forms.

  • Employees.

    You need to figure out how and when you
    want to tell your employees that the business will be temporarily closing. If
    you are afraid of a mass exodus, you may only want to tell key employees and
    tell the others closer to the date. Generally, the more time you can give
    people to get their own affairs in order, the smoother the transition can go.
    Helping your employees with references and connections can help keep morale up.

    Remember to consider your employee- last paychecks,
    and keep in mind that some states require you to pay out any unused vacation
    days. Speak to your attorney or contact your local Equal Employment Opportunity
    Commission
    for details on the employment laws in your state.

  • Financial
    Advisors, Accountants, and Tax Specialists.

    Your professional service providers will
    need to know what you want them to do while your business is closed. There may
    be tax and financial related reports due even while your business is closed.
    Come up with a plan including communication frequency and new responsibilities.

  • Suppliers.

    Simply not reordering your supplies may put
    your suppliers in a whirlwind. Keep those relationships strong with your
    suppliers. When you restart your business, you will be relying on your
    suppliers and you do not want to burn bridges.

  • Creditors.

    You will be responsible for any debts you
    may have. Temporarily closing your business does not exempt you from making
    payments. Contact all of your creditors and tell them you are temporarily
    closing your business. Try to work out a payment plan that will work well with
    you and your business.

  • Customers.

    If you have the means, your customers
    should also be contacted. Explain how product or service support will be
    handled while you are closed, the duration of the close, and consider providing
    recommendations to other businesses. Remember that customer loyalty is
    important, especially if you plan to reopen your business after a while.

Lower Costs as Much
as Possible

Keeping your costs low while you business is closed is
important. With proper planning, most costs should be able to be cut completely
or reduced. Here are four costs that should be lowered:

  • Rent/Mortgage.

    If your business is currently renting,
    contact the landlord and discuss options you have. Ask if you can get out of
    your lease or sublease your space to another business. Rent is usually one of
    the largest costs and carrying it can get expensive.

    Depending on your timeline, consider
    selling your facility if you own it. This would cut your costs drastically
    because you will also be able to lower or cut most of the expenses associated
    with the facility such as security, insurance, and maintenance. If you cannot
    sell your facility, you may consider renting it out to any business. There are many
    seasonal businesses, such as political campaigns and short-term contractors,
    looking for temporary office space.

  • Utilities

    Again, depending on your timeline, having
    utilities shut off can save your business money. Remember that if you are
    renting, property owners may require you to have essential utilities kept on
    for safety and maintenance. If your office is in a cold environment, having no
    heat may cause pipes to burst.

  • Subscriptions.

    Comb through your subscriptions and see
    which can be canceled or suspended. Some newspapers and magazines make be able
    to give you credit and start the subscription after you reopen. Remember to
    consider other types of subscriptions such as online databases, IT services,
    and services related to software (scheduling and payments).

  • Insurance.

    Contact your insurance company and tell
    them how long you are planning to be closed. They may lower your premiums to
    reflect the changes. Figuring out what insurance you need to continue and what
    insurance you can go without can be discussed with your agent.

Schedule and Prepare
Tasks

To avoid fees or fines, staying organized while your
business is closed is important. If you are temporarily closing your business,
you are still responsible for submitting the required reports to your local,
state, and federal government. Contact your state and create a calendar of when
certain reports are due.

Report your taxes even though you do not have any revenues
or profits. If you do not submit anything, your state and the IRS will be
expecting a payment. Late fees and penalties are applied and when you restart
your business, you will be responsible for those.

Related Resources

About the Author:

Jim

Comments:

Very interesting article. Unfortunately the topic of closing your business is something you only think about when you absolutely need to. A lot of times this forces people to rush into their decision without a great deal of input. This is a great little checklist of things to help keep track of all of the little things that play a big part of organizing and maintaining a business. Great article! ---This post was edited to remove a commercial link. Read our discussion policies for more Community best practices.
When circumstances require a small business needs to close, there are several tasks to be solved before we can finally close the doors. Some of these tasks to be done to comply with local and federal laws, while others are dictated by their business ethics. When closing a business is rarely an event that is hosted by the owners and ensure that all loose ends are tied can take some of the sting of the process. The vote to close the transaction, Dissolve your business with the government of Cancel permits, licenses and fictitious business names. Paying taxes and liabilities. Notify creditors, employees and customers. ---This post was edited to remove a commercial link. Read our discussion policies for more Community best practices.

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