When you’re closing your business, you’ll need to work through some legal, tax, and procedural concerns that can be overwhelming. One of the best courses of action you can take is forming an exit team that can guide you through the process.
Who should be on my exit team?
Look for experts who have knowledge in fields that you lack. Many hire the following pros as they work through their exit plan:
Consider working with an attorney who understands the issues your business is facing. As you wind down your business, you may need their help with final taxes, lingering contractual obligations, liquidation requirements, fair employment termination practices, and bulk sales requirements. A great attorney can help you mitigate liabilities after you close your business, too.
How can I find a capable attorney?
If you’ve worked with an attorney in the past, you might already have a great connection. Most small business attorneys are well-versed in what you need to do to close a business.
If not, consider connecting with our network of attorneys who are experienced in these issues. Click the Connect button below to get started.
A quick tip: Be sure to speak with multiple attorneys before making a selection. Most offer a free in-person consultation that you can use to get to know their skills, strengths, and styles of communication.
Use the consultation to gauge their knowledge and expertise with small business issues. Here’s a short list you can use to structure your discussion:
- Have you helped businesses like mine terminate and/or file for bankruptcy?
- How familiar are you with the tax requirements of dissolving a business?
- How many times have you guided a business through the dissolution process?
- Are you experienced in contract termination, disputes, and resolutions?
- What is your experience in collecting large debts from clients?
- Do you have experience with negotiating loan or lease terminations and other debts?
Ask questions about each attorney’s practice, availability, and style of communication, too. This set of questions can help you find and compare the attorneys you meet:
- Which members of your team will handle my requests?
- Can you refer me to another lawyer if we find an issue outside your realm of expertise?
- Will you have any conflicts of interest in taking on my business?
- How will you communicate with me?
- How long will it take for a contract review and other necessary tasks?
- What is your fee structure?
Pair what you learn with online reviews, verification of licensure, a review of the attorney’s website, and web searches to ensure that you have enough information about your attorney candidates to make an informed decision.
What about payment?
Legal fees can vary greatly among lawyers, practices, and regions of the country. Be sure to ask any attorneys you consider about their fees and preferred payment arrangement.
Can I navigate my close without an attorney?
Some owners complete their closures without an attorney’s help. Of course, it’s far easier to have one on your team. Hire this pro if you’d like help navigating unclear legal and tax requirements, avoiding taking on unnecessary risks, and completing the process with minimal headaches or frustrations.
You’ll need an accountant who can help you organize your financials, file your final returns, and prepare for future tax concerns.
If you plan to negotiate any of your business’s outstanding debts, you may also benefit from working with an accountant. This pro can make cash flow projections and help you prepare your financial pitch for debt settlement.
How can I find one?
Accountants at these firms may have the knowledge, skills, and experience you need to navigate your exit. Check them out here:
Another way to find a great accountant is by getting a referral. Other business owners, your attorney, your banker, or a contact in your industry may have one to recommend.
What qualifications should I look for?
Many top-tier accountants are certified public accountants (CPAs). This designation is an industry-standard verification of an accountant’s knowledge and expertise in the field of public accounting. Try to find an accountant who has this designation and experience handling small businesses’ financial needs.
Before retaining an accountant’s services, speak with accountants from several firms to learn about their experiences, capabilities, styles of communication, and fee structures. These questions can help you assess and compare the pros you meet:
- How can you help me prepare for closure?
- How many clients have you helped through a small business exit?
- What is the standard turnaround time for each step of the process?
- Which of your team members will handle my requests, and what are their qualifications?
- How often will you communicate with me?
- Can I talk with some of your clients about their experiences?
- Do you charge per hour or per project?
- Can you provide me with a written estimate of your services?
How should I make a selection?
Choose an accountant with the right skills and qualifications. Then, write an engagement letter that spells out the services you need, how long you’ll need assistance, and the fees you’ll pay upfront and throughout the process.
Can I manage my close without an accountant?
An accountant can be tremendously helpful with tax advice, debt repayment strategies, and debt negotiation preparations. It isn’t advisable to close your business without an accountant’s support. But if you’re confident in your knowledge of tax law and generally accepted accounting practices, you may be able to handle your close without an accountant’s help.
Work with an asset appraiser who can assess the market value and probable sales prices of your real estate, vehicles, equipment, inventory, brand name, and customer lists.
Where do I find an asset appraiser?
Your broker will likely have ties to a pro who can help, but if you’re going it alone, you can find an asset appraiser by clicking the Connect button here:
How much does it cost to hire an appraiser?
The cost depends on the size of your business and the number of assets you own. Most owners pay between $5,000 and $30,000.
What qualifications should I look for?
Many of the best appraisers belong to appraisal associations such as the American Society of Appraisers (ASA), the National Association of Business Certified Valuation Analysts (NACVA), the American Institute of Certified Public Accountants (AICPA), and the Institute of Business Appraisers (IBA). Each of these associations offers certificate or accreditation programs for experienced appraisal specialists that include practice, application, and rigorous testing. Some require members to be a certified public accountant (CPA), which is another qualification that can benefit you greatly as you wind down your business.
Can I do this work on my own?
In many cases, you can estimate the value of your assets by seeing what similar assets are selling for at auctions or online. Of course, most experts advise getting a professional appraisal for any item that’s high in value, including real estate, vehicles, and equipment.
If your business has aging accounts receivable, you could benefit from working with a collection agency.
Of course, you could take on this task yourself. If you’re interested, this article can be a great resource:
How do I find a collections agency?
There are lots of reputable agencies with experience helping businesses recover what they’re owed. Here are three popular choices:
What do I need to know?
Any collections agency you work with will represent your business. Because of this, it’s important that you understand and are comfortable with the techniques they’ll use to reclaim the money you’re owed.
Tactics aren’t the only thing that matters. You should also ensure that the agency you select is insured, licensed in your state(s), and has experience collecting for businesses like yours. They should also attest that they adhere to the rules of the Fair Debt Collection Practices Act.
What does it cost to use a collections agency?
The cost depends on the approach you want to take. Some agencies prefer to be paid per collection. They often ask for 25-50 percent of the total value of the debt. But here’s something to keep in mind. If you authorize them to negotiate lower debt settlements, their take remains the same because it’s based on the full value of the debt.
Other agencies may offer to buy your accounts receivable for a percentage of the outstanding invoices. Many will pay pennies on the dollar, averaging $0.04 for every dollar you’re owed.
Do I need to work with a collections agency?
You can certainly close your business without a collections agency’s help. However, these agencies often have more success recovering debt than owners might. Plus, the option to sell your receivables can be a great last-resort option to recover seemingly unrecoverable debts.
Financial advisor or wealth manager
If you’ll have cash in hand at the close of your business, you may want to work with a financial advisor or wealth manager who can help you make smart investment choices.
What’s the difference between the two?
Both a financial advisor and a wealth manager help their clients to grow and protect their assets. Anyone can work with a financial advisor, but wealth managers often work exclusively with high net worth clients.
How can I find one?
Here are some that business owners often recommend. You can check them out in the table below. You’ll also see a service we offer to help you find a local financial advisor or wealth advisor. Follow the link we provide to get started with that option.
What criteria should I use to choose one?
There are no license requirements for financial advisors or wealth managers. Still, the best advisors and managers often have certifications that prove their knowledge in their field. You might work with an advisor or manager who has a certified financial planner (CFP) or chartered financial analyst (CFA) designation, both of which require extensive study for the designees.
Financial advisors should be registered through FINRA. You can use FINRA’s Broker Check tool to learn whether an advisor is registered to sell securities and offer investment advice. You can also review any actions or complaints that have been filed against the advisor.
The Small Business Administration (SBA) can connect you with a mentor who can counsel you through the closing process. The SBA partners with SCORE, Small Business Development Centers, and Women’s Business Centers to lend support to small business owners.
How much do these services cost?
The services are free for small business owners.
How can a mentor help with my closure?
The mentors these organizations use are experienced in every part of the business process. As experts in their fields, the mentors know how to work through the pitfalls of closure and can explain how to work through the complexities involved in closing a business.
How do I get started?
Click the links below to connect with a mentor:
After building your exit team, log into your owner’s portal for a free step-by-step guide to closing your business.