How to Close a Small Business - A Personal Experience - Part 4: The Final Days (The Paybooks Saga)

The Empty Store
The Empty Store

We just completed handover of our storefront to the landlord. The last few weeks have been hectic to say the least and today should have been cause for celebration but we got some additional bad news this week (more on that later).

We had success selling our equipment and had buyers for everything except for some side tables for a dishwasher. We actually had our final sale a week earlier than planned given we had steady business and ran out of food to sell. We had sold so much equipment by then it was not worth the trouble to order more food to try to make more meals so June 12th ended up being our last day of business.

A notice was placed in the local newspaper, we send out several email reminders and had closing information on our website. We were able to get our gift card liabilities down but still have some outstanding. There is another store within an hours drive so we will keep our account open for anyone who tries to use a gift card at that store. Eventually we will close that account but it will stay open at least through the end of this year.

The last two weeks have been making plans with everyone to pickup the remaining equipment and clean up the store. We probably went overboard but we patched all the dry wall (it was pretty bad after we pulled down the shelves, the paint stuck and tore the paper) and even repainted large sections of the walls. We just did not want any issues with handing over the store since we had reached a buyout agreement.

By the middle of this week the store was empty and the sign was removed. It seems like yesterday we were just building out the store so it was kind of sad week. In some ways there is a sense of relief this part of our lives is over but its also sad that no evidence exists of all our work and sweat to open the business.

So after we are done what final comments and words of advice do we have?

  • We found taking our time to close the store allowed us to sell our equipment for better prices than at auction. We think we achieved close to 60% the original value vs. about 35% we thought we could get at auction. Overall we earned about $9k more than we thought an auction would bring. At the end we were selling stuff cheaply to just get rid of things, but by the time we closed the store for business we had all the high dollar items sold.
  • We have been open with our vendors and customers trying to close all accounts in an orderly fashion. We had some contracts that we were able to close as long as we could document we were closing the business without further obligation. These were mainly small. We also sent out many email reminders for our customers to use their gift cards. We gave them a month from our 1st announcement to the time we had our final sale day.
  • We did not discount our food till the very last day. By 5 PM that day our freezer was empty and all the food was gone. People were coming in each week without having to discount and it provided a little more income to help offset our expenses.
  • We considered filling bankruptcy for the business but at the end we worked out arrangements for most of our liabilities and the expense of filling did not seem worth it. We will keep the corporation open probably throught he end of this year then dissolve the corporation entirely. We will have some small bills to closeout next month but don't expect any other outlays (at least we thought so... See next section on this)
  • We were able to give our store manager a small severance. She really helped sell our equipment and has been with us since before we opened. This was not something we had to do but wanted to make sure she had a little bit to help carry her while she looked for a new job. I wish we could have done more.

Our entrepreneurial streak has not been killed, but I think it will be some time before we try something new. Too many bills to pay so having a steady job is a good thing right now. The expenses to finally close the store and buyout the lease were more than we expected but between this years tax return which we saved for this event, the earnings from all our equipment sales, and what we expect from next year's tax return, things should work out ok and we will be better off than having kept the business open. We still have our second mortgage to pay back and will still look at refinance options to consolidate our remaining loans.

At the end of this adventure we are happy to be moving on. It was an interesting experience and we learned a great deal, but we are already moving on and looking foward to a vacation in Denver next weekend.

Thanks for sharing our experiences and we hope our story may provide some guidance for others facing a similiar situation.

The Story Is Not Over ...

So now to the latest bad news... On Wednesday evening while picking up our cashiers check at the bank for the buyout payment, our banker had some bad news for us. Our payroll company, Paybooks, was in the news and the owner had been embezzling funds and defrauding his clients (Us!). He basically had been collecting payroll taxes but keeping the money and not paying the Government. Excuse my language but the scumbag, Jeffrey Sykes, basically was stealing from over 1000 companies in the Rochester area. Most of these were very small companies like ours with less than 6 employees.

http://www.oag.state.ny.us/features/paybooks/about.html

So, after calling our accountant and following up with NY State and the IRS we are looking at owing over $5000.00 we had already paid. The government must get paid and we are still on the hook for this money. We are not yet sure how many penalties and fees we face, so the final number is likely higher.

If we had not closed, this would have likely pushed us over the edge. We have heard of a few companies that will close from this.

I hope Mr. Sykes gets what he deserves (which I can't publish here).

Once we figure this out we'll keep you posted on how it all works out.

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Comments 3 comments

Askme profile image

Askme 6 years ago

I've really enjoyed your series. My husband and I are also in the middle of closing our ice cream franchise. Good advice. We are in the middle of selling off equipment. Unfortunately our landlord is not agreeable to working with us. Hope we can work something out but we've exhausted savings, lines of credit and 401ks (from our former jobs) just to stay afloat. we probably should have looked at closing months ago.

it is sad to close a business. I've likened the opening of a business to giving birth. There is the conception of the idea, the hoping it will come to fruition, the finding of the space, the signing of the lease, the months of doing tenant improvements, getting all the permits and city sign offs and finally, the birth/grand opening. And, when customers come in and say anything good or bad, you react the same as if they were talking about your child!!

It is tearful to close.

Interesting about your payroll company stealing from you, we had a similar experience. Our payroll company kept taking what I thought was excessive taxes monthly. We had been switched to annual filing because our payroll was small but nonetheless, our payroll company kept taking huge deposits. When questioned the owner just said "oh we are making the deposits and take more because we want to insure you don't get caught short". At times we really struggled to cover the tax deposits. Then I get a notice from the IRS saying no payment was made and I received fines and penalties. Fortunately for us the payroll company was still in business. Found out the tax deposits were being deposited into the payroll companies operating account not into our tax deposit account. I had to go balistic to get the money refunded. I fired the payroll company and just did my own payroll online with intuit.


same boat 5 years ago

Your articles were good to read. I'm just starting the process, and really didn't know where to turn. Thanks for pointing out a direction. The decision is hard, and I know things will get a lot worse before they even have a chance of getting better. I don't look forward to the next few months or even years when I consider the financial obligations I'm going to be stuck with. But that's life I guess....when we take risks, we have to be aware & willing to accept the consequences. Thanks again for sharing your story. I hope I come out on the other side a better & wiser person :)


another 4 years ago

Thank you.

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