Voluntarily closing a business
Coronavirus (COVID-19): Debt relief and advice
- Read about temporary debt relief measures, including changes to Commonwealth bankruptcy laws, to support individuals and businesses facing financial difficulty due to the impacts of the COVID-19 pandemic.
- Contact the National Debt Helpline for free independent and confidential financial advice, step-by-step guides, and information to help you manage your debts or negotiate with creditors.
There are 2 situations in which you would voluntarily close your business:
- You no longer want to run the business, you don't want to sell it and you have no-one to succeed you.
- Your business may be failing and you are finding it hard to sell. In this case selling some or all of your business assets, paying off your debts and keeping whatever money remains might be your best option. If you can do this before you become insolvent or bankrupt, it can help you get out of business without any long-lasting impacts.
Once you have decided to close down, it is important to create an exit strategy. Your accountant, solicitor or business adviser will be able to help you create a closing down plan.
The time it takes to close down is directly related to your business structure and the specific circumstances and reasons for closing your business. Larger companies with complex operations may take several years, while a sole trader operating from home may only take a couple of weeks to close down.
Emotional costs of closing a business
Closing down can be a confronting experience for you, your family and your employees. Some small business owners may also feel they are letting their customers and community down, as can businesses that have to stop ordering from other small businesses (suppliers, etc.).
Try to stay positive during this time. Counselling services can help you deal with emotions while you figure out what your next steps should be:
- Lifeline offers confidential emotional and crisis support. You can speak to a trained and dedicated volunteer 24 hours a day by phoning 13 11 14.
- Beyond Blue can support those experiencing depression and anxiety.
During this time, ensure your legal issues and finances are in order. It is important to talk to your lawyer and accountant to work out ways to effectively manage these matters.