It’s easier than ever to hang out a virtual shingle and declare your online enterprise open for business. On the flip side, a host of online businesses cease operations every day for a variety of reasons, good and bad. So, is it as easy to close up shop as it was to open? That depends on several factors, but there are certain matters that every business owner needs to consider when shuttering the online doors.
If your business is a sole proprietorship, ceasing operations is as easy as starting. That’s because there’s no legal distinction between you and the business. Say, for example, you open an online web design service, operating as a sole proprietorship, to provide you with a source of additional income. You’re paid directly by clients as an independent contractor, and you report those earnings on your personal income tax. If you decide to close your online business, all you need to do is stop accepting new assignments – which, of course, means that your additional source of income stops as well.
Things get more complicated if you’ve incorporated your online business. First, you must follow the business formation documents and by-laws. If your business involves more than one person, the other owners and/or officers must agree or vote to dissolve the business. In addition, the business needs to file a final corporate tax return. The IRS offers guidance on the paperwork for businesses that are closing. You must also notify the state in which you incorporated your business. State resources regarding required forms or notices are readily available online, such as those found here for New York or here for California. You’ll may also need to cancel any applicable business licenses and certificates. The Small Business Administration provides a detailed overview of the required steps, as well as a link to business counseling services.
Online sellers’ communities
What if your online business is a shop on eBay or Etsy? Such sellers’ communities have fueled the growth of ecommerce businesses, which are projected to increase 15% annually. eBay and Etsy make it easy to close your online store. Both sites offer detailed instructions for sellers, such as these from eBay, with multiple options for how to cease operations. These range from leaving a store “open” but with no items to sell, to closing your account entirely, with other options in between. For example, Etsy provides a vacation mode that lets you to suspend operations for a designated period, allowing you to accommodate a planned trip, an illness, or an emergency or natural disaster.
Whatever the form of your business, you’ll need to decide how to shut down its web presence: domain name, server services, email accounts, and the like. While these web legacy concerns can affect the shuttering of any business, they are especially important for an online-only store, particularly if you intend to open a similar business or sell the existing business’s domain name to someone else.