It’s not an easy decision to shutter your Pennsylvania business. While just making the decision is difficult, there are then steps that you have to take with the government to legally dissolve your business.
First steps to dissolving your business
The first steps to ending your business usually happen before you’ve announced anything formally. This part is referred to as “winding down your business.”
In the wind-down period, you’ll settle any outstanding business your company has. This includes settling all invoices, finishing business with customers and suppliers and slowly telling your employees about the decision.
In this period, you might start communicating privately with your customers, suppliers and employees in the name of transparency. You also will put a halt on ordering more supplies or products.
Liquidation and repayment
After you’ve finished your existing contracts, you’ll want to announce that you’re closing your doors and start selling your remaining assets. This can include any leftover inventory in a final sale as well as large equipment and other investments.
In this process, business law dictates that you start repaying all of the creditors that you have worked with. In order to make sure you leave as little debt behind as possible, you’ll want to start with the largest debt and work your way to the smallest.
The process of paying outstanding invoices and debts might be difficult, but hopefully, between the liquidation sale and wind-down period, you’ll have enough to break even if not turn a profit. It’s important to try to turn a profit – no matter how small – in order to finish the last rounds of business.
If there is debt remaining, all of the owners – not the employees – will become responsible for that debt. While unfortunate, this is common.
If there’s any money left after paying off the debt, you’ll want to split the remaining money between all owners. This amount might vary based on their level of involvement with the company up until this point.