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You've decided to close your business, for better or for worse. Maybe you've hit your goal, and are now tying up loose ends. Or maybe your great idea didn't go so great, and it's time to cut your losses and move on.
One would think that the hard part is making the decision to go out of business. But it may be even harder to actual bring your business to a close, or at least sell off your remaining inventory to make closing up shop easier. There are many detailed legal rules for how one is allowed to go out of business with consumers, primarily because of the popular allure with "store closing" labels, and their potentially corresponding deep discounts.
Here are three important legal tips you should know about going out of business sales.
1. Check Requirements With Your State
The first and most important thing to do is to determine your state's laws regarding going out of business sales. They are usually managed by the state's attorney general (AG) office. These vary by state, but can be very particular, such as why and when you are going out of business, how long sales can last, if the sale dates need to be registered with the AG's office, inventory for sale, and the like. All of this needs to be established before moving forward. Violating any of these requirements may result in severe financial penalties or delays, which are the last things you need when going out of business.
2. Determine the Exact Date You Will Close Your Doors to the Public
The date that you are allowed to do so many things, including hold the sale, reduce prices, advertise, and maybe even when your final tax bill is due, is determined by the exact date you plan to close your doors to the public. Many things refer to, and count backwards from, that date. Once it is established with the AG's office, it can't be easily changed. This is one of those measure twice, cut once things. You will still be free to conduct business related to closing shop, but you will not be able to sell any more inventory.
3. Be Certain of Your Final Tax Bill
As the old Ben Franklin saying goes, "nothing can be said to be certain, except death and taxes". And sometimes the two go hand in hand -- a double whammy! Be sure to take all the necessary tax steps when you have your going out of business sale. Taxes are owed on the current year, so you will need to continue to file all necessary quarterly forms until there is no more business activity to disclose. In particular, you will need to submit final tax forms, including income, sales, and payroll taxes associated with the sale. If the form has a "final" checkbox, make sure you check that on the last tax form you will be submitting.
If you have any questions about your going out of business sale, contact a business and commercial attorney. A legal advisor will be up to date on all laws regarding this sale, as well as any other legal issues you may have about wrapping up your business. If the goal is to ride off into the sunset peacefully, save a horse, and ride an attorney.