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Closing

If you're thinking of closing your business due to financial concerns or a change in personal circumstances, it is important to seek advice before you make a final decision.

Tell employees

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

When you close your business, your employees will have to be let go. This can be a difficult and stressful time so good communication is important.

Tell 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. 

End 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.

You may be able to avoid paying these costs by transferring your lease to a new tenant. However, certain risks and conditions may apply to a transfer, depending on the lease agreement.

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

Sell assets and pay bills

Even though you're not selling the business, you'll 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'll also need to pay all outstanding bills when your business closes.

Deal with tax and legal matters

When closing down your business, there are a number of tax and legal matters you may need to deal with.

Also consider whether Capital Gains Tax (CGT) and GST applies to the closure of your business. For example, if your business is registered for GST, you may need to include GST in the price of individual business assets that you sell.

Keep business records

You still have obligations to keep your business records, even after your business has closed. This include financial records, customer records and employee records.

Depending on the type of record and the industry you're in, there will be different requirements for how long and how secure your records need to be kept.

Generally, records should be kept for a minimum of five years after they are prepared, obtained or the transaction is completed, whichever is latest. Records containing sensitive information will also need to be kept and disposed of in a way that is in line with the Privacy Act 1988.

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

The Australian Taxation Office also provides a record keeping evaluation tool for you to assess your business' record keeping and information management.

Tie up loose ends

It is important to check if there are any requirements you need to take care of within your state or territory to ensure you successfully meet all your obligations when closing your business.

Some other steps to remember include:

  • disconnecting services (telephone, power, water, internet etc.)
  • redirecting your mail through Australia Post
  • contacting your local government licensing authority to cancel any licenses or permits
  • closing your business bank accounts
  • cancelling your web hosting and domain name if you have an online presence
  • shutting down your social media channels.