Winding up a business is not easy as it can take several weeks or perhaps months to do it properly. Shutting down an existing business needs proper planning so that you can protect your assets, credits and reputation in the market. And if you don’t follow the correct process you will not only end up losing assets and credits but it can also land you in lawsuits not to mention debts for years to come.
So if you have decided to close down your company, give notice to your customers, clients and creditors to keep any legal problem at bay. Also, plan how you convert your assets into cash. Here assets could be anything from stationery to furniture.
The tips given below will guide you on how to liquidate your assets in a safe and smart way.
Table of Contents
1. Identify what your assets are
The first step is to identify all the assets your business owns at the time of closing. So take a printed pen and a piece of paper and prepare a list of all the assets including the money owed by the company, security deposits, unpaid bills, rent given in advanced, furniture and money to be collected.
To help you out with this, we have prepared a list of potential assets that you should record:
- Furniture and art
- Real estate
- Car and other vehicles
- Security deposits
- Business equipment like phones, laptops, credit card machines and cash registers
- Insurance premium that is refundable
Apart from the tangible property, make a list of intangible assets as well. It can include:
- Contract with clients and suppliers
- Commercial Lease
- Ongoing work that holds market value
- Company name and list of customers
- Intellectual property like a trademark, copyright and patent
All these assets can make a good amount of money if dealt with smartly, so don’t underestimate their value. Also, do not forget to keep a record of the liquidation of these assets. It will help you in future if a creditor asks you to show proof of liquidated assets in case you face bankruptcy. Also, it will help you with your tax return.
2. Find buyers
After preparing the list, the next step is to find a buyer who will pay you the right amount for your assets. So get in touch with every person in your circle including competitors, clients, supplier and buyers to find the ideal buyer.
Contacting a competitor is a good option as they might be interested in your intellectual property, customer list, trademarks, patents, company or product name, copyrights and other work in progress.
Another way to find buyers is to list your assets including furniture, small equipment and other fixtures on popular websites for sale. Today, the online market is trending and can help you in your search of an ideal buyer. To make your search more effective, find the websites that specialise in auctioning goods. You can also contact a professional broker or business liquidator.
3. Do not cheat your creditors
Try to get the maximum value for your assets not because it will fill your pocket, but because you have to pay off your credit. And if you don’t pay your creditors and sell assets at a low price, your organisation will be tagged for fraud. And no matter how well established and organised your company was, your reputation in the market will suffer a serious blow.
So if you are thinking of giving away your assets like furniture and other things to your family and friends, then forget it and try to get as much money as you can and settle all your debts as soon as possible.
4. Sell leased and secure assets separately
Assets that are kept as a guarantee against a loan amount can’t be sold without prior permission of the person or organisation you have taken a loan from. It not only becomes a fraudulent action but is also considered a crime and is a punishable offence. So have a word with the creditor and find out alternative ways to sell your assets and pay off the money you owe to people.
Similarly, your leased property is not yours anymore, it belongs to the lessor. So you can either pay the amount or can hand over the property for the loan. You can also assign the contract to a third person. However, in most cases, the lessor reserves the right to cancel this assignment.
We hope this post will help you encash your assets without affecting your reputation and goodwill in the market.