Borders Out of Business — What Happens When a Business Closes?
On behalf of John McDuff, Attorney at Law posted in Business Transactions
Bought any good books lately? With the closure of all three Borders stores in Austin, Texas, earlier this year and the final liquidation of the entire chain expected to be complete by the end of September, readers have fewer brick-and-mortar bookstore shelves to browse.
“Closed for Business” a Sign of the Times
The demise of the 40-year-old bookselling retailer follows a nationwide trend in this tough economy. The most recent statistics from the Department of Labor show the number of businesses closing their doors exceeds the number of new businesses starting up over the past three years. And while winding down operations can present unique challenges for a large chain like Borders – which once boasted over 1,000 locations – there is a long checklist of issues that businesses of any size must run through before closing for good.
Legal Issues to Consider During Texas Dissolution
In general when dissolving an entity, Texas business owners must:
- File a dissolution document and pay a filing fee
- File various federal, state, county and city tax documents
- Cancel tax identification numbers, registrations, permits, licenses and business names
- Notify and pay employees, creditors, suppliers, vendors and contractors
- Close bank accounts
Other specific legalities will apply depending on how your business entity was structured (corporation, LLC, partnership or sole proprietor). There are filing and notification deadlines, along with consequences for missing them or for filing the wrong form.
Your business’s own governing documents may contain various “winding down” requirements and obligations that may need interpretation in light of ever-changing federal, state and local laws and regulations.
What About Business Property and Contracts?
Many businesses will benefit from an evaluation of assets and property – physical and intellectual – owned, leased or licensed by the company or to others. Contracts of all types will need to be reviewed and, perhaps, renegotiated. You also may benefit from outside legal help if business assets need to be distributed to partners, co-owners, or company officers.
No matter how large or small your business is and no matter why it’s closing, an experienced Austin business attorney holding a CPA can work with you to make sure you follow the right steps once you’ve made the decision to shut down.