Exiting a business

Exit process - step-by-step

Once the decision has been made to close down , it is important to follow a disciplined exit process.

The length of time required to complete the process is directly related to the complexity of the business and the circumstances underlying the decision to exit the business.

It can range from one week for a home-based sole trader business to several years for a larger company.

The following is a simplified exit process for closing down a business:

• Prepare a list of assets and perform a stock take in preparation for the disposal of assets and as the basis for tax calculations and tax returns later.
• Inform your Accountant and have them guide you on your statutory obligations such as final tax returns and ASIC notification for company deregistration
• Contact a property and asset disposal professional to obtain an asset valuation
• Prepare announcements and notifications and decide on the closure date. Interested parties must know what is happening: employees, customers, suppliers, bankers, utilities providers (water, electricity and phone), consultants, creditors and contractors. The notice should designate a point of contact for questions or inquiries.
• Have your lawyer review your contractual obligations such as office lease and car and equipment leases. These will need to be terminated or early termination arrangements negotiated.
• Close operations. This is when manufacturing or production must cease, retail sales must end, and employees are terminated as these measures will reduce expenditure dramatically.
• Dispose of and transfer assets to reduce or eliminate insurance cover.
• Settle accounts payable and debt obligations.
• Prepare final financial accounts and tax returns.
• Close bank accounts.
• Store business records.
• Notify the Australian Taxation Office that you are "ceasing your business"

Important

Business records should be kept for at least five years, even after the closing down of a business.