Closing or Selling a Business Checklist

Businesses get plenty of advice about starting and almost none about stopping. Yet how you close — or sell — determines whether the business ends cleanly or follows you around for years, in the form of unlodged returns, staff entitlements surfacing later, and records you can no longer access. An ending done in the right order is quiet. An ending done in the wrong order is expensive.

Staff are settled first

If you employ people, their entitlements come before everything else: final pay including unused annual leave, redundancy where it applies, and superannuation on those final wages paid by the usual due date for the quarter. Payroll reporting needs a final touch too — the STP finalisation that tells the ATO the employment records are complete. Shortcuts here have a way of resurfacing long after the doors have shut, and unpaid super in particular can follow the people behind the business personally in some circumstances.

Then the lodgements, in order

• Issue final invoices and chase what is owed while the business still exists to chase it.
• Lodge the final BAS covering the last period of trading. If you are keeping business assets for personal use, or selling them off, there can be GST consequences worth checking before this BAS goes in — it is not the lodgement to rush.
• Cancel the GST registration once the final BAS and any adjustments are dealt with. There is a time limit for cancelling after you stop trading, so it should not sit on the shelf — but it comes after the final BAS, not before.
• Cancel the ABN last. Cancelling the ABN pulls the other registrations down with it, which is exactly why it belongs at the end of the list and not the beginning.
• Lodge the final tax return for the entity — and for a company, deal properly with deregistration rather than simply walking away from it.

Records outlive the business

Record-keeping obligations do not end when trading does. Generally, records need to be kept for a number of years after the transactions they relate to — check the current requirements for your situation — and some, such as those relating to capital assets or employees, for longer. The practical trap is software: the subscription gets cancelled in the first week of tidying up, and the records go with it. Export everything — financial reports, payroll history, source documents — to storage you control before any subscription ends.

If you are selling rather than closing

A sale adds a layer to all of this. How the price is allocated across the assets matters to both sides, the GST treatment of the sale itself needs to be established rather than assumed, and the capital gains tax on the sale can, for eligible small businesses, be reduced very substantially by the small business CGT concessions. Eligibility for those concessions depends on facts — structure, how assets were used, timing — that are set long before the contract is signed. We will not unpack the concessions here; the point is simply that the biggest tax outcomes of a sale are usually decided years before the sale, which is why the planning is worth starting very early.

What we commonly see go wrong

• The ABN cancelled first in a burst of tidiness, making every remaining lodgement harder than it needed to be.
• Software subscriptions cancelled before anything was exported, leaving no payroll or transaction history when questions arrive later.
• Final super treated as optional because the business is closing — it is not.
• Sale contracts signed before anyone asked about the GST treatment or the CGT position, when the answers could no longer be improved.

A worked example

As an illustration: a café owner closes at the end of a lease, cancels the ABN and the accounting software subscription in the same week, and moves on. Months later, a former employee queries their final pay and super, and the ATO follows up on the missing final BAS. The records went with the subscription, reconstruction is slow and priced accordingly, and what should have been a short, orderly wind-down becomes a year of correspondence. The same checklist, run in order, would have cost a fraction of the cleanup.

When to get help

If closing is on the horizon — or if selling is even loosely on your mind for the next few years — the conversation is worth having before you act, not after. Wind-downs are cheap to run in the right order and expensive to repair, and for a sale, the early planning is where most of the value hides.

Should I cancel my ABN or my GST registration first?

Neither, until the final BAS is lodged. The order that works is: final BAS and any GST adjustments, then cancel the GST registration, then cancel the ABN last — cancelling the ABN pulls your other registrations down with it, which makes any remaining lodgements harder.

How long do I need to keep records after the business closes?

Generally for a number of years after the transactions they relate to — commonly five, and longer for some records such as those involving capital assets or employees. Check the current requirements for your situation, and export everything from your software to storage you control before any subscription ends.

When should I start planning if I want to sell the business?

Much earlier than most owners expect — ideally years before a sale. Eligibility for the small business CGT concessions, which can substantially reduce the tax on a sale, depends on structure and other facts that are set long before the contract is signed. Early planning keeps those options open; late planning can only work with what is already there.