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How to shut down a small business?
I've spent the past 4 years operating a small website design business out of my home. Things started out promising, but the situation has been steadily declining.
The business has a small amount of debt, which can be paid off fairly easily over the next few months. My biggest concern is my clients and how to handle paperwork and such. I have a few clients who I am will to continue working with on a part-time basis, but I was wondering what is the best way to go about informing these clients of the change, as well as how to shut everything down without short-changing anyone.
Shutting down was a very difficult decision to make, advice from someone who has gone through a similar situation would be greatly appreciated.
Sorry, it is structured as a sole proprietorship.
You didn't say what structure your business uses. Is it a corporation or LLC or a sole proprietorship? If it is a sole proprietorship, the only thing you need to do is let your clients know what is going on and go through with the scale down or closing.
Corporations and LLC are a little more complicated in that you must file a certificate of disillusionment with the Sec of State in the home state of the business (where it was originally formed).
If the latter is true and you are going to try to keep a hand full of clients part time, you may want to dissolve the original company and form a new company to handle the clients you are keeping. Send letters to your clients letting them know what you are doing if you take this route, otherwise just keep serving your clients and inform them of your reduced availability if you new status would affect them adversely.
Letters to the business creditors letting them know what is happening should also be mailed out with any information as to how you will be handling the final bills. It would be best to keep funds flowing through the business until all final bills are gone.
Give them 30 day notice and offer suggestions as to where they can go.by emmettgolf - 7 years ago