If you employ people, there are several employment issues you need to address in the process of exiting your business. The specific issues will be dependent on whether you are selling your business or closing it.
On this page:
Selling your business
Closing your businessSelling your business
If you are selling the business and employees are transferring with the business and will continue to be employed by the new owner, then you will need to ensure that all employment records are accurate and up-to-date - see Selling a business.
You will need to provide the buyer with all of the details, including employment agreements and conditions, financial obligations such as leave entitlements and any legal issues or obligations - eg a former employee about to sue for unfair dismissal.
As part of any sale agreement you will need to agree with the buyer exactly what obligations and liabilities you will be responsible for and what will transfer with the business.
When applicable, you will need to outline all of these details in the vendor statement that you provide to the buyer. You should also ensure that all of these employee matters are included in the sale agreement.
If employees are not transferring with the business, you will need to make all arrangements to terminate their employment and settle all entitlements as if you were closing the business - see next item.
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Closing your business
If you are closing your business (or when employees are not transferring with the business as part of the sale of the business) you have obligations to your employees in finalising their employment.
You will need to finalise payment of wages and salaries, any accrued leave, superannuation contributions and any termination payments due. Also there will be related tax obligations to finalise.
Key issues to consider
Employee or independent contractor?
Final payment entitlements and your obligations will depend on whether the worker was an employee or an independent contractor. For information see the Employer obligations checklist on the Australian Tax Office (ATO)website.
Pay As You Go (PAYG) tax
You will need to calculate final PAYG amounts for employees and submit to the ATO. Use the Tax withheld calculator at the ATO website.
Fringe Benefits Tax (FBT)
To calculate any outstanding FBT for employees, use the FBT calculator on the ATO website.
Superannuation
You will need to calculate any final superannuation contributions owing and pay by the quarterly cut-off date.
Eligible Termination Payments (ETPs)
ETPs apply only to employees and not to independent contractors. You will need to calculate payments according to the relevant employment agreement or award. ETPs are taxed differently from other payments. See the ATO's website for more detailed information about Eligible Termination Payments and use the ATO's ETP Calculator.
Other employee matters
There are other matters you will need to consider when finalising employment. See Ending employment on this site and the Business exit checklist on the ATO's site.
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More information
On this site
Running into difficulties
Closing a business
Succession and transition planning
Bankruptcy