What you’ll need may depend on:
- why you’re closing
- your tax, superannuation and other legal obligations
- your business structure, for example:
- sole trader
- company, or
We’ve gathered a checklist of tasks that commonly need to be completed to close down a business, and included links to useful information and specialist services.
Key closing down tasks
No matter the exact nature of your business, there are some key tasks most business owners must attend to when closing a business.
- setting a closing date
- ending lease agreements, such as on:
- plant and equipment
- selling or returning remaining stock, if applicable
- collecting outstanding debts
- paying creditors
- meeting obligations to employees and contractors, including making sure they receive all owed entitlements
- meeting all tax requirements and obligations
- cancelling business registrations with:
- notifying relevant parties, such as vendors, clients, banks, and insurance companies.
During the process of closing your business, you might want to access support for small businesses and mental health support.
You can also contact NewAccess, a free, confidential mental health support program developed by Beyond Blue specifically for small business owners.
Get professional advice and make a plan
Depending on the size and complexity of your business and its structure, the process of closing it down can take some time.
Before you begin, it’s a good idea to talk to a lawyer, an accountant, and a professional business advisor. They can provide you with individualised advice specific to your situation, and help you make a closing down plan.
Speaking to a lawyer ensures you are fully aware of both your rights and your obligations. Contact LawAccess NSW for guidance on the best place to seek legal advice.
If you need assistance in resolving a dispute, contact the NSW Small Business Commissioner.
Depending on your circumstances, you may be able to access free and low-cost legal assistance in NSW through the following services:
- Legal Aid NSW
- The Law Society of NSW’s Pro Bono Scheme
- Community Legal Centres NSW.
You can also contact the following services for legal assistance, or for a referral to the appropriate service:
- The Law Society of NSW
- The Australian Small Business and Family Enterprise Ombudsman
- The Australian Tax Office (ATO)
- The Fair Work Ombudsman (for queries relating to employees, contractors, and your rights and obligations).
Professional business advice
There are 2 NSW Government programs designed to help you access professional business advice:
Both these programs can provide ongoing and personalised support for your business.
You can also contact the NSW Small Business Commissioner (SBC) for confidential, free business advice.
Make a plan and set a closing date
Putting together a closing down plan can help the process run smoothly. Making a plan can also help to ensure that all necessary steps are covered.
You’ll also need to decide when to stop trading and close your operations. Once you’ve set this date, you can start notifying relevant parties of the upcoming business closure, including your employees, contractors, customers, vendors and clients.
Before closing your business there are various obligations you have to meet.
Employee and contractor obligations
If you have employees or contractors, you’ll need to let them know you’re closing your business and ending their employment. You can speak to the Fair Work Ombudsman (FWO) for advice.
What you need to do with your employees depends on why you’re closing your business. For example, you may need to offer your employees redundancy.
You’ll need to prepare their final pay including outstanding wages, leave or other entitlements. Your obligations to employees include how much notice to give, or pay out.
Your obligations to your workers also depend on:
- their age and type of employment
- their contract, award or agreement
- how long they’ve worked for you
- if long service leave applies
- the number of employees you have.
Report the employees you let go when finalising your Single Touch Payroll (STP) data.
If you rent your business premises, you should check when your lease is due to end, and see if that matches the timeframe you have in mind for closing your business.
If it doesn't, you can speak to your landlord and try to negotiate to end your lease early,
Remember to get any new rental agreement you make in writing.
Depending on your rental contract, you may have to pay a fee for breaking the lease.
Contact the SBC for advice about retail and commercial tenancies.
It is very important that you meet all tax obligations when closing your business. Even a small error can result in penalties.
It’s a good idea to get advice from the ATO or your registered tax professional.
Final tax obligations when you are closing a business often include:
- lodging and paying final business activity statements (BAS)
- making GST adjustments on your final BAS
- preparing final accounts
- lodging final income tax returns
- lodging final Single Touch Payroll (STP) data or a payment summary annual report.
Other common tax obligations you must meet when closing your business include:
- income tax, including Capital Gains Tax (CGT)
- pay-as-you-go (PAYG) withheld for your employees
- superannuation guarantee for your employees
- fringe benefits tax.
You need to notify the ATO after you close your business, and to finalise your accounts.
Tax obligations must be finalised before you cancel your ABN or GST registrations.
Even if a business is closed, it will still be registered with government entities including ASIC and ABR. After your last day of operating your business, you’ll need to:
- cancel your GST registration within 21 days
- cancel your ABN within 28 days
- cancel your business registrations with ASIC.
See if you meet the requirements and need to:
If you sell your business, you may need to transfer your business name instead.
Check the effect on other business registrations before you cancel anything.
Cancel any licences or permits with your local council or licensing authority. For example, you may need to apply to cancel a liquor licence, or a licence to play music or films.
Review your finances
You will need to review your business's finances, including any and all assets and debts. If you have debts, you will need to pay these first.
Decide if you need to sell your business assets such as stock, equipment, vehicles and licences.
If you sell your assets, consider if you need to pay:
Solvency and insolvency
Your next steps depend on if your company is solvent (and able to pay any debts), or insolvent (and unable to pay its debts).
You can contact the Small Business Financial Counselling Support Line for free advice on 1800 413 828, or visit their website.
If your company is solvent, you may need to look at winding up your company.
If you can’t pay your debts you may need to consider insolvency and:
- voluntary administration
- receivership, or
There are penalties for trading while insolvent. If you have been trading while insolvent, you need to speak to an insolvency specialist.
Other things to consider
Informing your suppliers and customers, closing accounts and policies and tying up loose ends.
Suppliers and customers
Give enough notice to suppliers that your business is closing so they can plan ahead. Also decide how to tell your customers.
For example, you can use your social media accounts or a sign at your business. You may also be able to generate more income in the last few weeks if your customers know you’re closing.
Before you leave your business premises for good, make sure you:
- dispose of all waste
- redirect your mail
- disconnect utilities and services, such as:
- phone and internet.
Notify your bank that you want to close your business bank accounts.
Remove your business’s online presence and ask other website owners to remove links to it. Cancel any accounts, profiles or registrations, such as your:
- social media
- web hosting
Cancel your business insurance policies, such as:
- workers compensation insurance
- public liability insurance
- commercial property insurance
- compulsory third party (CTP) insurance
- commercial car insurance.
Keep in mind, you may need to get run-off cover. This type of liability insurance protects you if someone suffers a loss from work done by your business after it closes.
Speak to a qualified insurance broker if you need guidance.
Alternatives to closing
Before you make the final decision to close your business down, consider if you can:
- get help to continue your business
- pause and restart your business at a later time
- adapt your business
- resolve a dispute
- develop a succession plan and pass your business on to someone else
- sell your business.
You can also close your business in different ways, such as;
- closing it down and selling any assets
- selling it
- merging it with another business
- passing it on to another person.
If you'd like some more advice around the decision to close your business, you can contact the SBC, or the ATO, who can help you assess if your business is still financially viable.
There may be more things to consider. You can get started by watching the ATO’s selling or closing your business video.
After you close
Records and privacy obligations
All records related to closing your business (including tax records) must be kept for 5 years. Business registration and employment records must be kept for 7 years.
Keep your business records after you close. These include your:
- sales and purchases
- payments to employees and contractors
- payments to other businesses.
You should keep electronic or hard copies of other records, including:
- receipt books
- sale reconciliations
- accounting software
- web-based systems.
If you hold any personal information of customers, employees or contractors, it is very important to make sure that you comply with privacy laws. You might need to securely store some records and ensure the destruction of others.
Check what to do with these records to comply with privacy for small business laws.
NSW Government links
- Business support for bushfire-impacted communities
- COVID-19 help for small businesses
- Business Concierge
- Business Connect
- Small Business Commissioner (SBC)
Australian Government links
- Australian Taxation Office (ATO)
- Fair Work Ombudsman (FWO)
- Australian Securities & Investments Commission (ASIC)
- Australian Business Register (ABR)
- Office of the Australian Information Commissioner (OAIC)