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Liquidation Explained

Why is it some businesses seem to simply “go out of business” and some have a liquidation? Find out what liquidation really means.

Essentially, liquidation means that a company’s assets are worth more than the value of the business’s ability to generate income. So when you see a furniture store having an “Everything Must Go” sale, they mean it. They are selling everything! So it’s interesting to note that liquidation is also referred to as “winding-up.”

The money the business makes from selling not only their remaining inventory but also the staff’s desks, lamps and printers, is going towards paying off any remaining debt the business may have outstanding with the hope of having some money left over for the owners.

You rarely see liquidation in businesses that specialize in more service-oriented businesses because they value is intangible and the assets are minor.

If you’re the owner of a business that’s struggling and looking for a way out from under the business, a liquidation may be right for you. We can help you determine if it is or not, so give us a call today!

Do you have the support you need to manage your small business bookkeeping? Schedule a 30-minute appointment to speak with a local small business adviser.