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

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

Here are some suggested steps to guide you through the process.

1. Question your decision to close your business

Financial concerns, changes in personal circumstances or the difficulty to comply with government regulations may drive you to close your business.

The end goal of your business is to generate profit. If the business is no longer profitable, and is unlikely to be profitable in the future, your best option may be to close your business.

Before you do this, you may want to consider seeking help or advice from a business adviser to see if you can put your business back on track.

The Australian Tax Office website has a business viability assessment tool you can use to determine if your business is still financially viable.

2. Set a date to close your business

You can properly 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 parties know.

3. Take care of your employees

If your business has employees, you must notify them and officially finalise their employment before your business closes. You will need to pay out any entitlements such as outstanding wages or accrued leave.

4. Notify your suppliers and customers

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

  • let them know that your business is closing
  • tell them the date from which you'll no longer need their services
  • pay them any outstanding amounts

It's also a good idea to let your customers know when you're closing the business. This will minimise their inconvenience and may also maximise your profits right up until the date you close.

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
  • personally advise customers
  • 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

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.

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

6. Sell your business assets and pay any outstanding bills

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

You also need to pay all outstanding bills when your business closes.

8. Keep business records

Even after your business closes, you must keep your business records, including financial records, customer records and employee records.

Each industry and each record type has 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. 

Records containing sensitive information will also require you to keep or dispose of them in a way that is in line with the Privacy Act 1988.

The Office of the Australian Information Commission has information on how the Privacy Act applies to small business.

The ATO also provides a record keeping evaluation tool for you to assess your business' record keeping and information management. You can find out more about record keeping and closing your small business on the ATO website.

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
  • contact your local government licensing authority to cancel any licenses or permits
  • close your business bank accounts
  • 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.

10. 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 assistance is available. These include:

  • financial advice through the MoneySmart website, to help you take care of yourself financially
  • career advice through the myfuture website if you're looking for a new career direction
  • employment assistance through Australian JobSearch, if you're looking to find a job

The Services Australia can also offer employment and financial assistance.

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Learn how to cancel your business registrations.