The Wells Fargo/Gallup Small Business Index indicates that a little more than half of all business owners say they are not ready to quit working or sell their business. Roughly the same amount of people stated that they are concerned that they will not have enough money to retire.
It is not easy to make the decision to sell or close a business, especially one that someone has spent a lifetime building. Any Illinois business attorney knows that the process can be complex and emotional. However, business owners should think about their exit strategy well before their targeted retirement date. When a business has substantial assets, selling the company can fund retirement. However, if a business is no longer profitable, closing the doors may be the best option.
Choosing to sell
According to the U.S. Small Business Administration, the most important part of selling a business is correctly drafting the sales agreement. The document should include the names of the parties involved as well as the following:
- A list of the assets that will be sold as well as any inventory included
- The purchase price and payment terms
- A covenant not to compete
- Any pertinent background information
Owners who are already thinking about their retirement should plan for flexibility so the sale of the business can take place during a strong market. As an Illinois business attorney would recommend, this can improve the odds of getting the best possible price for the company. Waiting until the last minute to make the sale can lead to a rushed decision, fewer buyers and much less revenue. Investopedia recommends using the funds from the sale of a business to fund a simple IRA, a simplified employee pension IRA or other retirement options.
Choosing to close
Some owners may decide that closing a business is the best option. A sole proprietor may do this at any time. However, someone involved in a partnership, corporation or limited liability company will have to consult with other owners to dissolve the business.
The Small Business Administration advises that anyone who is considering closing doors should consult with professionals, including accountants, attorneys and business brokers. Failing to take the right legal measures can result in tax liability. When closing, an owner will have to cancel any licenses and permits that are no longer needed. Even the business’ name registration can be canceled with the local government.
Deciding what to do with a business after retirement is not something that should be taken lightly. Anyone who is weighing their options should consult with an Illinois business attorney.
Should you have any questions about closing or selling your business or any other law that may affect your business, please contact Waltz, Palmer & Dawson, LLC at (847)253-8800 or contact us online.
Waltz, Palmer & Dawson, LLC is a full-service law firm with various areas of service to assist your business, including: Employment Law, Intellectual Property, Commercial Real Estate, Litigation and general Business Law services. Individual services include Estate Planning, Wills and Trusts, Probate, Guardianship, Divorce and Family Law, Collaborative Divorce & Mediation.
This article constitutes attorney advertising. The material is for informational purposes only and does not constitute legal advice.
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