The past year has not been very kind to business owners as the COVID-19 pandemic ravaged the Philippine economy, along with the rest of the world. Even today, everyone is still finding ways to cope. Things have been very difficult, and as such, it is understandable that some companies might have had to close their doors, permanently or temporarily.
Noteworthy, temporary business closure is not as simple as hanging up a “closed” sign outside your shop. Even temporary closures need proper recognition and documentation to be recognized by the local government. Check out the eight crucial steps you need to follow to carry out the proper temporary closing of your business, for whatever reason you deem fit.
1. Immediately Contact Your CPA
One thing is certain, the incomes of companies have been severely affected by the pandemic. As such, you will need your CPA to help you get your finances to prepare for closure. They will also help you create a strategic exit plan for your business. These certified financial specialists are trained to handle not only accounting, bookkeeping, and auditing, but they also conduct business analyses and provide guidance during transition periods. In addition, they will assist you in collating all the necessary paperwork and processes required by both the National and Local governments.
2. Inform Your Staff
Before closing your business, you must notify all its shareholders, including your staff. Not only do they make up an integral part of your business operations, but they also rely on you and your company to make a living. They should be the first to know of any major changes because it will impact their quality of lives. Do inform them months ahead to allow them time to find a new job, gather their belongings, and make a transition themselves. They are people too. Moreover, this will also give them the time to file for all the benefits that they might need, like potential unemployment stipends or DOLE assistance should they have difficulty looking for work.
3. Let Your Clients and Service Providers Know
It is important to inform your suppliers, vendors, and investors about the temporary closure so that they can temporarily suspend their deliveries and obligations to you. This will help cut your spending and maximize your budget. Additionally, it is also to inform your consumers so that they may be able to find alternatives or stock up on whatever goods you are offering. Letting them know beforehand that you will be closed temporarily and for how long you will be gone will ensure that you still maintain your customer base during your hiatus. Keeping constant communication with them mans they will still be there by the time you reopen.
4. Call Your Bank or Financial Institution
If you desperately need to shut down business operations due to a financial emergency, call your bank or any formal lending institution wherein you have obligations. They will have loan options for you to help your business get back on its feet. In this time of pandemic, financial institutions give leeway such as extending payment deadlines or offering loan consolidation with less interest rates. Go ahead and ask because you won’t know your options until you try. Additionally, you may contact financial handlers and analysts to help you with your situation.
5. Provide Your Staff with Unemployment Benefits and Separation Pay
When temporarily closing your business, it is important to secure your employees’ unemployment benefit or separation pay if you are letting them go permanently due to uncertainty surrounding your reopening date. You must comply with this to avoid any lawsuits with the national labor commission.
6. Fill Out the Needed Unemployment Forms
Your duty as an employer is to settle employee payroll forms. Contact your CPA to help with Payroll Services. They can help you get these in check and to ensure full compliance with the requirements and deadlines. You don’t want to make a mistake in this aspect to avoid issues down the line.
7. Properly Document Everything
If you are going for temporary closure, you must properly document everything from accounts, closure dates, employees laid off temporarily or permanently, employees paid during the closure, and transactions made during the shutdown period. Stay on top of your accounting and bookkeeping because being organized leaves less room for errors, allowing you to setup shop once everything is stable.
8. Be updated on National and Local Laws
As always, be informed of the law! All legally operating businesses must follow national and local laws. Keep updated on the news for any additions to business and tax laws. If you need additional help, contact an accountant for assistance. You can call our team of CPAs at UNA. Take advantage of our free 30-minute consultations.
