Thinking About Closing Your Business? Here’s What You Need to Know

Shutting down a business can be a big decision, and it’s essential to go through the process correctly to avoid future headaches. Whether you’re winding down due to retirement, a change in circumstances, or a shift in focus, there are important financial, legal, and tax considerations to take care of before closing your company or trust.

This guide will walk acts as a guide to close down your business, ensuring that everything is wrapped up smoothly.

Generally we like to explore the sale option first if we can but this blog is for those of you who have decided to wind down the business rather than sell the business. This blog does not apply to a situation where a liquidation event applies.

The Business Closure Checklist: What to Do Before Shutting Down

1. Finalise Outstanding Stock and Assets

Before closing, sell off, dispose of, or transfer any business assets and inventory. If you have unsold stock, consider:
✅ Selling at a discount to customers.
✅ Bundling products into clearance sales.
✅ Transferring stock to another entity (if applicable).
✅ Donating unsold stock

For business assets like equipment, vehicles, or intellectual property, you may want to sell, transfer, or write them off depending on their value and usefulness.

2. Collect Outstanding Accounts Receivable

Chase up any outstanding invoices from customers before shutting down. Once the entity is closed, it may be difficult or impossible to collect payments. Options include:
✅ Following up with outstanding debtors for payment.
✅ Offering incentives for early payment (discounts or flexible terms).
✅ Writing off bad debts if collection is unlikely.

3. Pay Off Any Outstanding Debts

Before closing the business, ensure that all liabilities are cleared, including:
✅ Supplier payments (you could try negotiate for final payments).
✅ Business loans or credit cards.
✅ Employee entitlements.
✅ Lease agreements (or negotiate early termination).

Failing to settle debts before closing could create issues down the track, particularly if creditors attempt to recover amounts from directors or trustees.

4. Review and Cancel Any Business Subscriptions

Many businesses forget to cancel ongoing subscriptions and services, leading to unnecessary expenses. Check for:
✅ Software subscriptions (Xero, QuickBooks, CRM systems, etc.).
✅ Business insurance policies.
✅ Professional memberships and licenses.
✅ Domain names and website hosting.

Avoid paying for services you no longer need by reviewing your business expenses and cancelling anything that won’t be required post-closure.

5. Consider Run-Off Insurance (If Applicable)

Some businesses, particularly in professional services or industries with liability risks, may need run-off insurance to cover potential claims after the business has ceased trading.

Run-off insurance can help protect you from liability or professional indemnity claims that may arise even after the business has shut down. Speak with your insurance provider to determine if this is necessary for your situation.

6. Process Any Final Payroll Obligations

If you have employees, make sure their final wages and entitlements are processed correctly. This includes:
✅ Paying out final wages, unused leave, and redundancy payments (if applicable).
✅ Issuing final PAYG Payment Summaries or ensuring employees are included in the Single Touch Payroll (STP) finalisation.
✅ Paying final employee superannuation contributions

7. Get a Final Quote for Business Tax Returns

Before shutting down, ask your accountant for a final estimate of tax preparation costs for:
✅ The final business tax return (for the company or trust).
✅ The final Business Activity Statement (BAS).
✅ Any remaining GST, PAYG withholding, or income tax obligations.

This will help you understand the last financial costs before officially closing the business.

8. Stop Business Transactions & Reconcile Accounts

Once all expenses and revenue have been accounted for, you should:
✅ Ensure there are no more incoming or outgoing transactions from the bank
✅ Ensure the account balance is zero before closing the account.
✅ Keep records of final transactions for tax compliance purposes – download the statements for the tax year.

This helps ensure a clean financial closure without any surprise transactions after the business has ceased operations.

9. Get Your Bookkeeping Up to Date

Before submitting your final tax returns, ensure that:
✅ All bank transactions are reconciled.
✅ Accounts payable and receivable are finalised.
✅ All financial records are accurate and up to date.

A clean set of books will make the closure process easier and prevent any ATO queries down the track.

10. Transfer Accounting Files to Your Accountant

If you use accounting software like Xero or QuickBooks, grant your accountant access to ensure they have everything needed for the final tax lodgments.

Some things to do include:
✅ Transfer the subscription to your accountant who can hold it on a low cost subscription until they finalise the tax returns

11. Cancel Business Registrations (GST, PAYGW, ABN, etc.)

Once business activities have ceased, work with your accountant to cancel unnecessary registrations, such as:
✅ Goods and Services Tax (GST) – If turnover falls below $75,000 over 12 months.
✅ PAYG Withholding (PAYGW) – If you had employees.
✅ ABN (Australian Business Number) – If the business is no longer trading.
✅ State-based registrations – Such as payroll tax or business licenses.

12. Lodge the Final BAS and Tax Return

The business may lodge a final tax return and final BAS (if applicable). This ensures all obligations with the ATO are met and prevents unexpected tax bills later.

This step includes:
✅ Lodging the final business tax return.
✅ Paying any outstanding GST, PAYG, or other tax obligations.

13. Deregister the Entity (If You No Longer Need It)

If the business is structured as a company or trust, you must formally deregister it with ASIC (for companies) or dissolve the trust (if applicable).

Working with an accountant / lawyer will ensure all legal steps are followed correctly.

Final Thoughts: Closing Your Business the Right Way

Shutting down a business is more than just stopping operations—make sure you do things in the right order and work closely with your Accountant along the way.

We hope you’re enjoying our blog, just a note though. The information provided here is intended for general informational and educational purposes only. While we aim for accuracy, we can’t guarantee that this content will apply to your specific situation—every business owner’s circumstances are unique.

This blog is not a substitute for personalized advice from a qualified accountant, tax advisor, or any other professional. If you have questions specific to your individual circumstances, we strongly recommend consulting a professional for tailored advice.