Briggs AnalyticsHow to wind down a startup: the step-by-step checklist
In this article
Decide, and get approvalTell the team and investorsSell what the company ownsDo not let the data disappearPay creditorsDissolve and file final taxesDecide, and get approval
The board votes to wind down and, for most companies, shareholders approve the dissolution. Bring in a lawyer now. If the company cannot pay its debts, the path may run through an assignment for the benefit of creditors or bankruptcy instead of a simple dissolution.
Tell the team and investors
Employees first, with final pay dates and benefits details. State laws set when final wages are due. Larger employers may owe notice under the federal WARN Act. Then investors, with a plan and a timeline.
Sell what the company owns
Equipment, domain names, IP, customer contracts if they can be assigned, and the company's records. Everything sold becomes cash for creditors and, if anything is left, shareholders.
Do not let the data disappear
AI companies now pay for the records closed companies leave behind: the code with its history, support tickets, project boards, shared drives and the threads where decisions were made. Google bid $10 million for Spirit Airlines' records in a court-run sale (Business Insider). A startup's records sell for far less, but they can be real money at a time when every dollar goes to creditors or investors.
The catch is timing. Vendors delete closed accounts on their own schedules. Export the repositories, the ticketing system, the chat workspace and the email archive before you cancel anything. How to export each one.
See what your company's operational data could be worth.
Free estimate · about 2 minutes · no files required · no obligation
Get my estimate →Pay creditors
Secured lenders, then taxes and wages, then other creditors, in the order state law requires. Your lawyer sets the order. Shareholders come last.
Dissolve and file final taxes
File the certificate of dissolution in the state where the company was formed, Delaware for many startups. File final federal and state returns and mark them final; the IRS lists the steps for closing a business. Keep the records your lawyer says to keep, for as long as they say.
In short
- Board and shareholder approval first, with a lawyer.
- Tell employees first, then investors. Final pay and WARN notice rules apply.
- Sell what the company owns, including its records and code, before the accounts are deleted.
- Pay creditors in the order the law requires, then dissolve and file final taxes.
Questions owners ask.
How long does it take to wind down a startup?
Weeks to months. Selling assets and paying creditors usually take the longest.
Can I sell my startup's data after it shuts down?
Yes, if the records still exist and the company owns them. Export before cancelling the accounts, and check customer contracts with your lawyer.
Who gets the money from selling the company's assets?
Creditors first, in the order the law sets, then shareholders if anything is left.
Do I need a lawyer to wind down a startup?
Yes. Dissolution, creditor payments and employee obligations all have legal requirements. Briggs Analytics is not a law firm.
