Things to Consider When Closing Up the Business

July 29, 2011 (Press-News.org) Things to Consider When Closing Up the Business

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Making the decision to sell your business is a big one. Whether you plan to retire, start a new venture, need to get out from under your current situation, or suffer from unexpected illness (the number one reason people sell their businesses), once you make that decision, there are several options available to you.

There are two options available for transferring ownership through traditional sales. These include a sale in full and a gradual sale.

A sale in full transfers ownership to another party and, depending on the structure of the sale, may allow you to receive the proceeds immediately upon the transfer. A gradual sale allows the owner to continue working at the business, usually for a salary, and allows the purchaser to finance a payment plan. This is an ideal situation for an owner who enjoys the work but wants to step back from some of the responsibility, and is also ideal for a buyer who doesn't have the money to provide a full payment up front.

Another option to transfer ownership of a business is through a lease agreement. This transfers ownership through a contract that sets out the conditions and payment you will receive in exchange for the temporary rights to your business.

Some people may find themselves in a situation in which the sale of the assets individually makes more financial sense than selling the business itself. In that case, liquidating the assets is a smart solution. It's important to remember you will need the cooperation of any creditors before you can liquidate. Because liquidating assets can be complicated, a lawyer may be necessary to ensure that the sale is properly conducted and the assets are sold for the highest possible value.

In some cases, none of these solutions may be right, and the only way out of a failing business may be to file for bankruptcy protection. This can be a complicated process and before deciding if bankruptcy is the right choice for the business, it is important to speak with an attorney.

How your business is structured will determine the steps required to transfer ownership, as well as which of these options may be best for you. Whether your business is a sole proprietorship, a partnership, an LLC, or a corporation will determine the requirements for sales and other legal issues. Because of the situation-specific nature of transferring ownership of a business, the U.S. Small Business Administration recommends seeking advice from an attorney and a small business expert.