Steps for Closing a Business

In a business, many unexpected or unforeseen events can happen due to the involved dynamics. One possibility is that you may have to discontinue it for certain reasons like not getting enough time, lack of support from the family, financial and management problems, or planning for a larger business. In such a situation, you can either opt to sell it, pass it on to a business partner or a relative, or close it down completely. If you really decide to choose the latter, then it is always better to follow a certain plan to close it safely and legally.

Voting for Dissolution

If you are a sole proprietor, then you may not face much of a problem; however, if you are operating in a partnership or a corporation, then you and your associates should equally agree to the decision. You can follow your own organizational regulations or the rules of your state’s business statutes. As per the rules, there should be a maximum vote of the stakeholders supporting the dissolution. Ensure that the owners sign in a consent form regarding the decision. While conducting the process of voting, you can follow the guidelines framed for the said process.

Follow Regulations

The second step is dissolving the business entity officially. This is applicable for a corporation or a limited liability company (LLC). Here, you are required to fill certain official documents. However, it has to be noted that each state has different rules. If you dissolve your business with a government office (state or local), you will not be required to bear the liabilities of taxes and/or filings. This also helps in informing the creditors that your entity is no longer liable to incur debts.

Terminate Rights

The third step is to cancel permits, licenses, and the business name, so that no other company can use your rights or trademarks. If you don’t do this at the time of closing, there are chances that some other company may use them and incur penalties in the future. For cancellation of a seller’s permit or license, you can invalidate them by contacting the issuing agency. It is always advisable to publish in a local newspaper about the abandonment of your business name. This way, you have a proof to avoid any unwanted issues.

Payoff Outstanding Dues

Lastly, make sure to pay any outstanding taxes, debts, (e.g. business loans) and employees’ paychecks. You may be required to fill certain forms about income tax payments and returns (if any). You can notify your creditors about this decision and clear or settle any debts.

Following these legal formalities will protect your credit, as well as your reputation as a businessman. In some instances, selling a business is a better option; however, make sure that you research more information about the price and potential buyers. Be patient and don’t make haste, otherwise you will regret, if you get a better deal later on. In case of any difficulties, you can always hire and/or seek advice from a professional like a lawyer, financial advisor, or an accountant.

Benefits of Small Business Credit Cards

The bottom line is that credit cards have now replaced your regular unsecured, personal line of credit. Most people work under the assumption that banks will lend them money if their business is flourishing. However in reality, there is no bank that will lend you money without some sort of collateral. Even lenders will only loan money to a borrower who has some capital. Even something that is as ‘safe’ as commercial real estate would require at least a 20 percent down payment. It is indeed very difficult to get a loan for a commercial business, even if your business is established.

If you are running a business or have recently started a small business set up, it is advisable to get as much credit as possible on your credit cards – but do this at a reasonable rate, because getting too much credit will surely make your credit score fall.

Certain Advantages to Know

Here are a few ways in which your small business credit card can benefit you:

Extends Cash Flow ~ For businesses that are heavily dependent on a steady cash flow to pay for a number of things like contractors and supplies, a credit card can help by purchasing items for certain clients before the customers invoicing is done. In this way, the money that is given out doesn’t necessarily need to come out of your businesses accounts. If your business falls under a situation wherein you can pay off debts within a certain amount of time, then get one that has high credit limits and offers benefits if you pay within 30 days. If on the other hand, the bills are paid to the customer after 30 days, then look for a business credit card with a low rate of interest, as it won’t really matter whether you carry some amount of balance for a month or so.
Cards with Rewards ~ If your business requires you to do a lot of traveling or indulge in entertaining your clients, then opt for one that gives benefits and rewards. For instance, frequent travelers have frequent flier business cards that provide benefits every time they fly with their airlines. The benefits can be leveraged in such a way that you can earn considerable amounts of merchandise rewards and cash back offers. So, go ahead and consult with your accountant on how you can use these credit cards to your advantage, either for business use or personal use.
Flexible Credit Limits ~ There are two varieties of cards – preset and no preset. Preset cards limits tend to be more generous with their limits, and don’t usually carry any annual fee. On the other hand, with no preset cards like American Express, limits tend to carry annual fees but are more flexible. So, if your business finances are more prone to spikes because of frequent purchases, then a business credit card with no preset limits will offer more flexibility. If however, your business works mainly on a cash basis or doesn’t really need a purchase inventory every now and then, you can use the no preset card for emergencies. Look for cards that offer a reasonable credit limit with a low APR or Annual Percentage Rate. If more money is required, it will be available for your business and can be paid over a period of time.
Increased safety ~ These cards indeed make a lot more sense when you require services or supplies over the Internet. Even though you could probably use a debit card for these transactions, it is a lot safer to use a credit card since you will be able to contest any charges if at all you don’t receive the service or product that you were expecting. These cards have no liability for unauthorized charges, so if at all your credit card information does happen to fall into the hands of the wrong person, you will always be protected.

It is also worth noting that these credit cards are not beneficial for everyone. Most business owners don’t have very good financial situations, and a business credit card would probably dig a deeper hole for them within no time at all. If you can’t completely pay off your credit card every month, then you are in big trouble. If you are going through this with credit cards, then they are not working for you and you need to get rid of them.

By making just the right choices when getting a small business credit card, you can turn your business into a raging success!