Checklist for closing your business
Closing a business is a significant decision and one that involves numerous steps to ensure it’s done legally and efficiently. If you’re considering closing your business in Australia, this checklist, inspired by CPA Australia, simplifies the process for those without extensive accounting knowledge.
Decide to Close:
- This is a personal and strategic decision. Consider seeking advice from business consultants or mentors to weigh your options.
Notify Relevant Parties:
- Tell your customers and suppliers about your plans, ensuring all contracts and orders are fulfilled or renegotiated.
- Inform your employees. Understand your obligations in terms of notice periods and final payments.
Finalise Your Finances:
- Close your business bank accounts after ensuring all transactions have been settled.
- Settle outstanding debts. This includes paying off business loans and paying all creditors.
- Collect money owed to you.
- Cancel your Australian Business Number (ABN) within 28 days of closing.
- Lodge your final tax return. Ensure it’s marked as the “final return” to inform the Australian Tax Office (ATO) of your business closure.
- Lodge any other outstanding tax forms, including GST, Pay As You Go (PAYG) and Fringe Benefits Tax (FBT).
- Pay all outstanding taxes.
Legal and Regulatory Compliance:
- Cancel any licenses or permits your business holds.
- Inform the Australian Securities and Investments Commission (ASIC) if you’re a registered company. An ASIC Form 6010 needs to be submitted.
- Ensure you maintain all business records for at least five years, even after closure. This is a legal requirement.
- Consider selling or leasing business assets. This can help settle outstanding debts.
- Dispose of any unsellable or unwanted assets responsibly.
Deal with Employees:
- Ensure all entitlements like outstanding wages, leave entitlements, and redundancy payments are settled.
- Submit the final payroll data to the ATO.
Cancel Business Name:
- If you registered a business name, ensure you cancel it with ASIC.
Insurance and Liabilities:
- Notify your insurance companies about the business closure to cancel or adjust policies.
- Consider retaining certain insurance coverages, such as professional indemnity, for a period after closure to protect against potential future claims.
Finalise Lease Agreements:
- If you lease property, equipment, or vehicles, ensure you check the terms of your lease. Some contracts may require notice or may have penalties for early termination.
Dealing with Intellectual Property:
- If your business owns intellectual property (like trademarks or patents), decide if you want to maintain, sell, or let them lapse.
Seek Professional Advice:
- Always consider consulting with a lawyer, accountant, or business advisor to ensure all aspects of the closure process are handled appropriately.
Closing a business is more than just locking the door and walking away. This checklist is a starting point to ensure you’ve considered the main obligations. By following these steps and seeking professional advice, you can navigate this challenging process with confidence.
Click here for a link to the CPA checklist as a PDF with checkboxes.
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