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Suspending Your Business: Legal And Financial Issues

Closing a business can be even more difficult than starting a business, because there are so many financial and legal issues you must take care of.

It is critical that you work closely with financial and legal experts to ensure you do everything in a timely manner and in accordance with the law.

Two additional valuable resources are the SBA and the IRS, which have a wealth of information on their websites about the financial and legal responsibilities you incur when closing a small business. Following is a list of legal issues you will need to discuss with an attorney as you build (and implement) your deployment plan:

It is important that you prepare a financial analysis of your business cash flow as you build your deployment plan. The analysis should list your start-up and recurring costs as they pertain to your business. The goal when suspending your business is to decrease your costs as much as possible and get the lowest minimum operating cost. Your financial analysis can assist you in eliminating as many costs as possible, including monthly subscriptions, service fees and more. If you lease a building, for example, you may decide to cancel the lease and lose the space rather than paying for it monthly. This would also eliminate utilities and multiple other costs.

If you own your space and plan on re-opening your business when you return, it may not make sense to sell the space. In that case, your monthly mortgage costs, insurance and applicable taxes will have to be included in your lowest possible operating cost. Once you have determined what your business’s lowest cost is, your deployment plan will be based around those costs and the elimination of unnecessary costs while you are deployed.

Following is a list of financial issues you will need to discuss with your accountant, tax attorney, or other financial advisor as you build and implement your deployment plan:

As mentioned before, the IRS is a very valuable resource when closing a small business. This Close Your Business Checklist from the IRS is a very helpful resource: http://www.irs.gov/businesses/small/article/0,,id=98703,00.html.

 

 

 

 

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