There is more to liquidating your business assets than just posting a yard sale sign. Below, Royal Legal Solutions help you better understand the scope of liquidation and how to best order the chaos a closing business may be going through.
Identify Your Business Assets
Before you start selling off your business assets, you should thoroughly inventory all property physically owned by your company. Your inventory list should include both tangible and intangible items.
- Business equipment, which includes items like computers, cash registers, and phones;
- Office furniture, such chairs, desks, art, fixtures, and desk supplies;
- Security deposits, such as those paid to landlords and utility companies; and
- Insurance premiums you prepaid that may be refundable.
- Commercial leases;
- Supplier contracts that are below-market rates;
- Customer contracts at rates that generate profits;
- Potentially valuable works in progress;
- Customer lists;
- Company name, which is essentially your company’s reputation;
- Intellectual properties, which can include copyrights, patents, trademarks and more; and
- Remaining invoice balances.
When inventorying these items, make sure you include a category designator, description and condition of the item, and who legally owns it. (Ownership may seem obvious, but it is important. If you bought a chair with your personal funds, you own it. If the business account paid for that chair, the company owns it. If your partner used their funds to pay for it, the chair belongs to them.)
You should keep detailed records of the ways you tried to sell each piece of your tangible and intangible assets. These records, which should include copies of your ads or website links, are an important means of protecting yourself from creditor inquiries. You need them for tax return purposes as well.
You should first liquidate any assets that are fully paid for and not promised to someone else, such as a vehicle that was used as collateral on a business loan. Industry contacts, like suppliers or competitors, are always potential buyers. Websites, like eBay, craigslist or industry-specific auction sites, are great ways to attempt to sell off equipment and furniture. (At most, you should not expect to receive more than 80% of the value of your assets.) Donating used items to charity for a tax deduction can also be helpful.
If you have pledged an asset to someone as collateral, you cannot legally sell or donate it without the express permission of that creditor. This fraudulent activity makes you personally and legally responsible in a court of law. For property you lease, you need to talk to the lessor before selling it off as well.
Identify Helpful Entities
When it comes to liquidating your assets, you may find it helpful to hire a professional. Royal Legal Solutions, for example, has the experience to help you navigate the liquidation process, as well as any debt negotiations or bankruptcy claims you may need to file.