There are plenty of resources to walk you through the closure and re-establishment of your business while maintaining a good reputation as a business owner. In such a situation, understand that it is not only important to maintain your client base, but also remain in good terms with the shareholders of your business for future reference. Here’s what to do in case you need to close and reopen your business under a new name.
Decide to close the business
Sole proprietors are at liberty to decide whether they should close their businesses or not. On the other hand, limited liability companies (LLC) and incorporated business entities (Inc.) require a unanimous decision for dissolution from the active members. Their decision should be based on guidelines in the article of organization.
Seek expert advice
Shutting down a business is an intricate process which requires legal and professional intervention. It is highly recommended that you prepare dissolution documents with expert advice from lawyers, business brokers, accountants, and bankers. Remember to file your dissolution documents because failure to dissolve a business entity legally will leave you liable for future taxation. However, you may not need to formally dissolve a sole proprietorship or a small partnership. Consult an attorney in case you have uncertainties with regard to filing dissolution papers.
Cancel legal entities
Dissolve all licenses, business names, permits and registrations that will be of no use in the future. If the business was registered under a trade name, ensure that you cancel the registration at your local government offices to protect your reputation and future business entities.
Re-Establish a New Business
In most countries, dissolved businesses cannot be reactivated, especially if the decision to dissolve it was voluntarily and legally filed. Re-establishing a business, therefore, requires the shareholders to form a new business entity by filing new articles of association with the relevant registration authorities. Simply give the business a new name and follow the same registration procedure used for the initial business entity.
Obtain Clearance from Taxation Authorities
Inform tax authorities about re-establishing your business under a new name. This process is applicable to businesses of all types, including sole proprietorships. The tax authorities will then track your new business information using its tax identification number, review its new guidelines and officially grant the permission to change the business name.
File an Article of Dissolution
The purpose of this document is to inform the relevant authorities in your locale that your business is operating under a new name. In this document, you will also need to give the terms and date for the dissolution of the old company, its previous name, and physical location.
Legal authorities may also require you to cure any deficiencies within a specified period of time, before reopening your business. However, this mostly applies to businesses that were dissolved through legal intervention. You must also pay past due taxes, fees and file any missing annual reports.
In an economy with increased mergers and acquisitions, it makes sense to close and re-establish your business, even under a new name. Not only will it help you increase your profit margins, but also make your business survive indefinitely.
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