Closing a Business

Perhaps it’s time for new challenges. Perhaps your business is just not doing so well. Maybe retirement is on the cards, or the business cannot be sold as a going concern.

Whatever the reasons for closing your business, there are a number of implications to yourself as the owner, to your employees and to other third parties when closing a business.

Personal implications
Look at what (if any) assets can be sold and keep in mind any tax implications this may have. Make sure you discuss any legal implications of closing your business with your solicitor. And don’t forget the lifestyle changes the closure of your business may bring about.

If you receive money from your business, you may want to think about reinvesting it.

Obligations to your employees
Your financial obligations to employees may include holiday pay, long service leave, redundancy and super contributions.

The Australian Taxation Office can assist with practical information for employers regarding lump sum payments and eligible termination payments. Contact the Australian Taxation Office for further information.

Obligations to third parties
When closing a business you will generally have to:

• cancel registration for the Australian Business Number (ABN), Goods and Services Tax (GST), and any other specific taxes which may have applied to your business
• pay any outstanding monies owing to creditors, or taxation obligations
• pay any outstanding monies owing to financial institutions, eg business loans, lines of credit, credit cards, leasing arrangements etc.
• return third-party provided equipment, eg. EFTPOS terminals
• adhere to specific legislation in the states and/or territories in which your business operates – for example, the cancellation of a business name, the cancellation of payroll tax registration and other matters. It’s essential you are aware of these specific requirements as they can differ widely within each area

Closing down your business can be a daunting yet possibly exciting time as you change direction and seek other opportunities. It's an excellent time to seek the advice of your accountant, solicitor and/or your financial adviser to detail your obligations, assess your many options – and move confidently into the future.

Important information about advice
As this advice has been prepared without considering your objectives, financial situation or needs, you should, before acting on the advice, consider its appropriateness to your circumstances. View our Financial Services Guide (PDF 56kb).