Many people choose to sell their businesses and move on to new things. However, a small business might decide to liquidate its assets rather than sell. Why should a person consider this option today?

When a person liquidates these assets, they convert them to cash by selling them. Insolvent businesses benefit from liquidation because the funds collected from customers may be used to pay creditors and shareholders. At times, this process is voluntary. However, a person might also be required to liquidate assets as part of a legal case. If this is the case, getting liquidation services through a third party is wise. 

Specific business categories are more likely to liquidate assets. A business with assets it indirectly uses to produce income, such as furnishings, may choose to liquidate. When doing so, it will find the cash value of these assets is minimal. Often, the only buyer these companies will see is a used office equipment dealer. However, they might be able to sell these assets through an auction.

Businesses may liquidate tools used to produce income directly. Restaurants, for example, often sell tools when liquidating. Competitors might purchase the tools, the business may sell them through used equipment dealers, or it might turn to an industry-specific auction house for help with these tools.

Retail storefront businesses own income-producing assets and may sell them as part of a liquidation. These businesses include small, independently owned, and operated ventures as public companies or multi-unit operations.

Liquidation and dissolution are separate processes. When a company liquidates, it ends the business. The LLC or corporation continues, and the owner must meet all obligations. For example, they must fulfill annual filing and taxation obligations. When a person dissolves a business, they end the legal business entity. All compliance obligations end once everything is up to date.

A person might liquidate a business for several reasons. Family members might not be interested in taking it over, or the owner might be trying to avoid bankruptcy. Liquidation is a way to exit a business without the hassle of selling it.

Many owners choose to work with a liquidation professional to guarantee they get a fair price for the items they sell. This professional will help evaluate the inventory to bring in the maximum amount so any existing debts can be paid. They may use one of several methods when liquidating these goods.

This individual might take a one-size-fits-all approach and sell items off the shelf. This allows for quick sales, but the liquidation plan is not customized. On the other hand, the liquidation consultant might develop a plan for each client. This process takes longer, as they must do a detailed business analysis. Once this analysis is complete, they determine how to price the goods.

When choosing a liquidation firm, ask to see results from prior liquidations. Will they have a representative on-site throughout the liquidation process? Learn how they conduct the sale and what they believe it will bring in. These are only a few questions that should be asked before making this critical choice.

Liquidating a business doesn't absolve the owner of any responsibility as this process is carried out. The owner must secure and monitor all assets and meet any insurance and bond requirements. Nobody wants to sell their business only to be hit with a hefty fine for failing to comply with all requirements for this type of sale.