There are many reasons to consider shutting your business. Explore the alternatives, from selling up to finding ways to turn around your finances.
Before making the big decision to close down, take the following steps:
Business debt hibernation is a new scheme for companies, trusts and other entities affected by COVID-19 to manage existing debts until they can start trading normally again. Find out if it’s a good option for your business and how to get started.
The first step is to gather all your financial documents. This will help you — and an advisor — see the true picture. If you owe people money, a detailed breakdown will also help prevent disputes.
If this is your reason for thinking about closing down, the best thing to do is take action. Ignoring problems won’t make them go away.
The amount owed can determine your next steps, including:
Business debt(external link) — Insolvency and Trustee Service
Your next step is to get sound advice from a financial professional, eg an accountant, bank manager, business mentor or a business turnaround advisor.
Gather all the information you can about your finances and any difficulties you’re facing. The more your advisor knows, the more they can help you.
If you’re simply ready to move on from your business, they can identify alternatives to closing down and help you get ready for the next step, eg selling your business
If you’re in financial difficulty, they can help you see where things went wrong and how to get back on track.
Paying off debts can seem like an impossible task when you have more money going out than coming in. But if you explain your problem, your creditors may be open to a longer-term repayment plan.
Talk to them early — creditors may be less sympathetic if you leave it until you’re thinking about closing your business.
If you’re going to close your business it’s important to file your final returns and pay your taxes by the due date. If you know you can’t do this, talk to Inland Revenue(external link) as early as possible.
Explain your position and explore what support might be available. If you bury your head in the sand and don’t pay, you’ll be charged interest and may face a penalty.
The same goes for ACC levies. Contact ACC(external link) to discuss your options, eg paying in instalments.
It’s important to take your time to think through the options and get good advice.
Make sure you assess all your options. These might include: