Before you close your business

Before you closing your business, you may want to consider seeking help or advice:

  • speak with your accountant – review your financial data and provide advice
  • connect with a business adviser - working with an experienced business adviser or expert can help solve business problems or guide you to close your business

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

  • you no longer want to run the business and have no one to pass it onto
  • the business is not making enough money to keep going

Financial concerns, changes in personal circumstances or the difficulty to comply with government regulations may drive you to close your business. Whatever your reasons, closing your business can take time. The length of time depends on your business’s size and complexity.

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

You can plan your business’s closure if you set a date to officially close your business operations. The earlier you set a closing date, the earlier you can let suppliers, employees, customers and other clients know.

1. Review your finances

Sell or dispose 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.

You will need to:

  • identify what assess need to be sold, make sure you do your research on selling prices which platform to sell your assets
  • you may need to sell excess stock at a discount, such as a closing down sale

Business assets can include:

  • all outstanding stock
  • tools, equipment and machinery
  • property and premises, including land or buildings
  • business vehicles
  • furniture, fixtures and fittings
  • domain names
  • intellectual property such as patents or trademarks
  • licenses and permits

Pay outstanding bills

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

2. Notify your employees and contractors

Change can be stressful for employees. Good communication is key to ensure that this period of change is easier for both yourself and your employees. To help your employees through this change is to give them as much notice.

If your business has employees, you must notify them and officially finalise their employment before your business closes.

Provide notice to your employees

You must give official notice or provide payment in lieu of notice to all employees. The law requires you to give them official notice in writing.

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 annual leave or long service leave

The Australian Taxation Office provides 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 depend on:

  • the terms of your existing contract
  • the relevant modern award
  • the number of employees your business has
  • whether the employee is entitled to redundancy
  • the state your employee is employed in
  • if long service leave is payable

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

3. Notify 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
  • advise customers in person
  • advise 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

4. Notify your suppliers

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

  • inform them that your business is closing
  • confirm your last orders
  • pay them any outstanding amounts

5. End your lease agreements

If your business has a lease, you'll need to end your lease agreement when your business closes. Depending on the conditions of your lease, you may still need to pay rent and other costs up until the end of the lease term. Read your lease agreement as it may have an early termination clause.

If you're unsure of the conditions in your lease agreements, you should contact a lawyer for professional advice.

6. Finalise your tax obligations

Learn more about how to lodge a tax return.

To cancel your PAYG withholding account, you can:

  • phone the ATO business line and speak to a customer service representative
  • complete an application to cancel registration (NAT 2955) form on the ATO website
  • ask your registered tax agent or BAS agent

Find out more about cancelling your PAYG withholding.

You need to finalise tax issues for your employees when you close your business.

These tax issues can include:

  • fringe benefits tax
  • pay as you go
  • superannuation

When you close your business, you need to consider cancelling taxes.

You should consider whether Capital Gains Tax (CGT) and Goods and Services Tax (GST) applies when you close your business. For example, if you registered your business for GST, you may need to include GST in the price of individual business assets that you sell. You may also need to make GST adjustments on your final activity statement, including for assets you hold after cancellation.

You may also need to:

Before you cancel, you will need to meet the lodgment, reporting and payment obligations for all the government agencies you deal with and that all processes have been completed.

Your business might need to:

  • lodge activity statements
  • lodge pay as you go (PAYG) withholding reports
  • repay goods and services tax (GST) credit refunds
  • pay outstanding tax debts

You can cancel your ABN online through the Australian Business Register or through your tax agent. You need to cancel your ABN within 28 days of ceasing business.

Find out more about cancelling your ABN.

8. Know what business records you need to keep

Even after your business closes, you must keep your business records, including:

  • financial records
  • customer records
  • employee records

Each industry and each record type have different requirements for how long and how secure you need to keep your records. Generally, you should keep records for a minimum of 5 years.

9. Tie up loose ends

When you close your business you may also need to:

  • disconnect your services (telephone, power, water, internet etc.)
  • redirect your mail through Australia Post
  • close your business bank accounts, you have in your business’s name, especially if it is a company
  • cancel your web hosting and domain name if you have an online presence
  • shut down your social media channels

Check if your state or territory has any other requirements you need to undertake to ensure you successfully meet all your obligations when closing your business.

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