Entrepreneurs spend so much time and effort building up their businesses that they often don’t know what to do when the time comes to close the doors. Every year, owners face the prospect of declining health, sometimes well before retirement age. What’s the best course of action? Every situation is unique, but people who fall ill to cancer or other chronic ailments typically find themselves in a dilemma. Should they sell their businesses, pass them on to family members, or simply liquidate the enterprise altogether? Regardless of your particular challenge, here are some common ways that owners deal with the harsh reality of a personal health crisis.
Deciding the Fate of the Enterprise
You essentially have three choices for how to dispose of an ongoing business operation when a health crisis forces your hand. First, you can contact a broker and offer the entire company for sale to the highest bidder. But some entrepreneurs choose to sign over control to a family member or close friend. Additionally, you might opt to shut down operations and close the doors for good. In that case, you’ll need to consult a lawyer about how to dispose of assets and pay the remaining debts.
Selling a Life Insurance Policy
Anyone who faces the prospect of living less than 24 months due to a serious illness should consider a viatical settlement as a way to convert a life insurance policy into cash. The process is simple and gives you the chance to use the proceeds for whatever purpose you desire. People use the money for specific things, including medical bills, settling business debts, taking vacations, or leaving an inheritance to loved ones. If you’re not familiar with how viatical settlements work, check out an online guide that explains all the details in clear language. It’s the best way to get started and the easiest way to convert an unneeded or unwanted policy into instant capital.
Consulting with a Lawyer
Whether you decide to pass ownership to a relative, sell the company, or liquidate it, consult with a lawyer specializing in organizational terminations. The process can be complex if you previously sold stock or have investors who own a piece of the profits. There’s always the matter of selling assets, paying creditors, and filing official paperwork with tax authorities as well.
Give yourself several months to sell assets like office furniture, machinery, computer equipment, vehicles, real estate, appliances, and anything else that was part of the company’s daily operations. Use a software program to keep tabs on everything you sell and make sure your accountant gets a copy of the file. You’ll need accurate records to pay any remaining debts and determine whether there’s a positive or negative balance.
Paying Outstanding Debts
Those who use viatical settlements to pull cash from insurance policies have the option to use those funds for whatever they want. That includes paying the company’s outstanding debts. Typical bills include amounts owed to vendors, landlords, banks, and investors. Work with your accountant to make a detailed, accurate list of every debt.