If you decide to close your business, you’ll have to liquidate its assets. Simply put, this means that you’ll be turning any remaining business assets into cash. Assets include tools, equipment, and furniture.
In most cases, the proceeds will be used to pay off creditors, but if your business is relatively debt-free, a significant portion of the proceeds could end up in your pocket. Here’s a basic overview of the business liquidation process.
Identifying Which Assets Will Be Liquidated
To start, you should put together a list of all of the physical property your business owns, in addition to sums of money that people owe you, such as security deposits, accounts receivable or rent that you expect to collect. Your list of business assets will vary depending on what your assets, but will typically include:
- Real estate
- Vehicles
- Office furniture
- Business equipment (computers, phones, cash registers, etc.)
- Security deposits you’ve paid to landlords or utilities
- Refund prepaid insurance premiums
In addition to physical property, there may also be some intangible property you own as a business that you may be able to sell. Examples include:
- Commercial leases
- Contracts with suppliers
- Contracts with customers
- Your company name
- Customer list (also known as goodwill)
- Intellectual property
- Accounts receivable
If you’re not sure what else you can liquidate, talk to an attorney who will be able to help you maximize your profit.
Finding Buyers for Your Business Assets
Once you’ve identified the property that is fully paid for and isn’t being used as collateral for a loan, you can start to find buyers. The length and complexity of the process will depend on your industry and the type of assets you have to sell.
You can use your contacts in the industry, such as competitors, partners, and suppliers to find interested buyers. Some of your competitors may be interested in taking over any jobs in progress, your company name, the names of your products, your customer lists, and intellectual property, such as patents, copyrights, and trademarks.
Where to Sell Assets
You can use various online marketplaces, such as eBay, Craigslist or Bid4Assets to locate buyers for your furniture, equipment, and fixtures. It’s also a good idea to take a look at websites specializing in auctions specific to your industry.
There are websites to buy and sell industrial equipment, construction machinery, restaurant equipment, and more. You may also hire a business broker or professional liquidator to help you with the process. Should you have items that are difficult to sell, such as highly worn out or old business equipment and furniture, you can donate them to a charity and obtain a tax deduction.
If you don’t have the time, resources, or interest in selling your assets, there are other options available. One of these options includes filing for bankruptcy. Filing for bankruptcy means that a bankruptcy trustee will sell your assets and pay off creditors.
If you choose to go this route, it’s essential to understand bankruptcy and the process behind it. An experienced bankruptcy attorney in your area can start the bankruptcy claim, give you advice, and provide you with the necessary resources to move forward.
Orum Young has over 35 years of experience with bankruptcy law and is eager to help you today. We have filed over 200,000 bankruptcy cases in our time – the most in Northeast Louisiana. Call us today at (318) 450-3192 to receive a free case evaluation.