Help to close your small business
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Should I close my business?
If you’re finding that your small business is no longer viable, you might need to consider closing your business. Making this decision isn’t easy, however, there are resources to help.
Before deciding, we recommend you speak with your accountant or a business advisor as soon as possible to talk about your options and see if they can help you get back on track. It’s best to get advice as early as you can as more options will be available to you.
CPA Australia offers a practical guide on warning signs your business might be in trouble, which includes early and critical signs, resources that can help and actions you can take. The ATO offers a business viability assessment tool that you can also use to determine if your business is still financially viable.
In addition to these resources, you might want to consider getting advice from experienced mentors at the Small Business Mentoring Service or applying to take part in the Victorian Chamber of Commerce and Industry’s business recovery and resilience mentoring program.
Closing your business
CPA Australia’s checklist for closing your business in Australia sets out the actions business owners need to consider when closing their business, including:
- key decisions that need to be made – Is my business still viable? Should I close my business? When should I close?
- financial considerations including paying off all obligations, notifying your lenders and collecting outstanding debts owed to you
- leasing considerations – if you are leasing the premises, make sure you know your responsibilities if you close before the end of your lease and if you are unsure, speak with a lawyer, accountant or other relevant professional
- communicating the closure to employees, contractors, customers and suppliers
- tax obligations including cancelling your ABN and PAYG, keeping records and making sure all your tax lodgement and payment obligations are met (e.g. outstanding BAS)
- legal obligations including cancelling your business name and deregistering your company via the Australian Securities and Investments Commission and and cancelling any licensing and permits
- looking after yourself and your staff including seeking mental health support if you need to and assessing your obligations under the Fair Work Act
- tying up loose ends including disconnecting services (e.g. water, electricity, phone lines and web hosting), removing your online presence (e.g. social media, company domain and email) and cancelling insurance policies that are no longer relevant.
Looking after your mental health
Closing a business can be a very challenging and stressful experience for a small business owner. If you are feeling stressed, worried or overwhelmed, we encourage you to call the Partners in Wellbeing helpline on 1300 375 330 for free and confidential mental health support and financial counselling.
Australia’s 2020 insolvency system reforms
The Australian Government has recently changed Australia’s insolvency system. The changes introduced new processes from 1 January 2021, replacing the temporary debt relief measures introduced in March 2020.
These changes aim to reduce complexity, time and costs and enable more people to restructure their small businesses quickly at this time. The changes include:
- a new ‘debtor in possession’ model, allowing the business owner to keep trading and propose a debt restructuring plan
- a new, simplified liquidation pathway for small businesses to allow faster and lower-cost liquidation
- reduced investigative and reporting requirements for liquidators.
To learn more, download the fact sheet on insolvency reforms and how the changes are supporting small businesses.