I will appreciate any pointers, tips and reminders or pitfalls regarding this. I have never done this before.
My son have to close down his shop, to avoid going down totally and while he still have stock and equipment that is worth something. I read a few threads on the topic, but would in particular want to get the correct retrenchment procedure. He has one staff member working for a few months, so we do not talk huge package. He would just like to follow correct procedure without having to pay a lawyer and avoid picking up a huge claim afterwards. The staff member is a white male, earning R4000 per month. My son will probably give him more than the required one week for every years service, as that will be one weeks salary only.
There is one prospective buyer, that will probably offer him 50% of the stocks cost price. What is the best way to go. Take that offer if it is made, or have a close down sale, probably also getting 50% if you are lucky. He is VAT registered. Stock value about R150 000 at cost and very little creditors, about R40 000 and cash balance of about R30 000. Equipment +- R15000. I am guessing here, but I think his overheads is about R25 000 per month, including his salary of R7500. It is a CC and there is a Corsa bakkie as well, which he wants to keep, as it is his only transport.
I understand the VAT implications.
Reason for closing down is that the business is trading backwards and shrinking all the time. At its hayday, stock was at R500 000 all paid up. The going backwards has a snowball effect, as my son now does other things as well to keep him afloat (after hours) and that cause the business to do even worse.