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Before you close your business

Before you close your business, get help from:

  • your accountant to review your financial data and get advice
  • a business adviser to help you solve business problems or close your business.

It can be a hard decision to close your business. The reasons can vary, but common reasons are:

  • no longer wanting to run the business
  • the business is not making enough money to keep going
  • changes in personal circumstances forcing the business to close
  • you’re unable to sell the business.

Whatever your reasons, closing your business takes time. The length of time depends on your business’s size and complexity.

Use the business viability assessment tool to help decide if your business is still financially viable.

Setting a date to officially stop operations helps you plan your business’s closure. The earlier you set a closing date, the earlier you can let suppliers, employees, customers and clients know.

1. Look after yourself

Closing your business can be an emotional time. After all, you’ve probably put in countless hours, money and energy. It’s important to know that support is available to help you more forward.

2. Review your finances

Sell or dispose of your business assets and stock

Even though you're not selling the business, you still need to sell or manage your business assets when you close your business.

Identify what assets you need to sell. Do your research on selling prices and platforms you can use to sell your assets.

You may need to sell excess stock at a discount, such as a closing down sale.

Business assets can include:

  • remaining stock
  • tools, equipment and machinery
  • property, including land or buildings
  • business vehicles
  • furniture, fixtures and fittings
  • domain names (website and email)
  • intellectual property, such as patents or trademarks
  • licenses and permits.

Pay outstanding bills

You must pay all outstanding bills when your business closes. If you’re having difficulty paying outstanding debts, speak to an insolvency practitioner or lawyer about your options.

3. Tell your employees and contractors

Change can be stressful for employees. Good communication from you will help make the change easier. 

Give your employees notice

Give your employees as much notice as possible that their employment is ending.

You must give your employees official written notice. There are some situations when a notice period doesn't apply to an employee.

You can either:

  • let your employees work for the notice period
  • pay out the notice period (known as payment in lieu of notice)
  • a combination of both.

The Fair Work Ombudsman’s website has more information about notice periods.

Employment termination payments (ETPs) are lump sum, one-time payments when employees no longer work for you.

An ETP may include:

  • payment in lieu of notice
  • redundancy or severance pay
  • a gratuity or ‘golden handshake’
  • compensation for the loss of a job
  • unused rostered days off
  • unused sick leave.

The Australian Taxation Office gives more information about employment termination payments and their tax implications.

Entitlements can include:

  • outstanding wages
  • accrued leave.

The final entitlements you need to pay your employees depends on their:

  • existing contract terms
  • award or enterprise agreement
  • eligibility for redundancy pay
  • long service leave payable.

The Fair Work Ombudsman’s final pay information will help you finalise pay to your employees.

4. Tell your customers

How you let your customers know will depend on the type and size of your business. You can:

  • post a notice on your shop front
  • post a notice on your business's website
  • tell customers in person
  • tell customers through your business's social media channels
  • hold a 'closing down' sale, with the added benefit of selling off your stock
  • send out an email or letter campaign.

5. Tell your suppliers

If your business uses suppliers, you'll need to:

  • tell them that your business is closing
  • confirm your last orders
  • pay them any money owed.

6. End your lease agreements

If your business leases property, vehicles or equipment, you'll need to end the lease agreement when your business closes.

You may need to pay rent and other costs until the end of the lease term. Read the conditions in your lease agreement as it may have an early termination clause. If you're unsure of the conditions, contact a lawyer for professional advice.

7. Finalise your tax obligations

Learn more about how to lodge a tax return.

To cancel your pay as you go (PAYG) withholding account, you can either:

Find out more about cancelling your PAYG withholding.

You need to finalise all employee tax issues when you close your business.

These can include:

  • fringe benefits tax
  • PAYG
  • superannuation.

You must cancel your goods and services tax (GST) registration within 21 days of stopping your business activities.

These tax registrations automatically cancel when you cancel your GST registration:

Capital gains tax (CGT) and GST may apply when you close your business. For example, you may need to include GST in the price of business assets that you sell.

You may also need to make GST adjustments on your final BAS, including adjustments for assets you keep after cancelling your GST registration.

You must cancel your Australian Business Number (ABN) within 28 days of stopping your business activities. But before you cancel, you must complete the lodgement, reporting and payment obligations for all of the government agencies you deal with.

Your business might need to:

  • lodge BAS
  • lodge PAYG withholding reports
  • repay GST credit refunds
  • pay outstanding tax debts.

You can cancel your ABN online through the Australian Business Register or through your tax agent.

Find out more about cancelling your ABN.

8. Finalise your legal obligations

If you don’t need your business name anymore, you'll need to tell the Australian Securities and Investments Commission (ASIC).

Learn more about cancelling your business name.

When ASIC deregisters a company it’s no longer a legal entity and is not able to trade.

Until you deregister the company, it must continue to meet all its legal obligations. This includes paying the annual review fee.

Before you deregister your company make sure you:

  • close the company’s bank accounts
  • cancel any registered business names and licenses
  • lodge the final tax return.

If you need help deregistering your company, contact a lawyer, accountant or business adviser.

Learn more about deregistering a company.

Contact the relevant government licensing authority to cancel any licenses or permits.

Go through your list of business insurance policies. Cancel any that are no longer needed, such as:

  • professional indemnity insurance
  • workers compensation insurance
  • public liability insurance
  • property insurance
  • product liability insurance
  • vehicle insurance.

You may need to get run-off insurance. This is a type of liability insurance that protects you from claims made against your business after you close it. It covers any acts, errors or omissions that may have happened before your business closed.

Talk to your insurer if you need help.

9. Know what business records you need to keep

You must keep your business records after your business closes, including:

  • financial records
  • customer records
  • employee records.

How long and how secure you need to keep your records differs between each industry and record type. Generally, you should keep business records for a minimum of 5 years. It's 7 years for employee records.

10. Tie up loose ends

When you close your business you may also need to:

  • disconnect your services (telephone, power, water, internet)
  • redirect your mail through Australia Post
  • close your business bank accounts, especially if it is a company
  • cancel your web hosting platform and domain name
  • shut down your social media channels.

Check if your state or territory has any other conditions you need to meet to fulfill your obligations when closing your business.

11. Future career and financial support

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