How to Properly Close Down Your Business - John R. Dundon II, Enrolled Agent
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How to Properly Close Down Your Business

How to Properly Close Down Your Business

Closing down your business is hard and heart breaking and if you are at the point that you are actually reading this post then people have probably been nagging you for money and you are at the end of your rope.  You worked hard to create opportunity for yourself as an entrepreneur but if the best option going forward is to close the doors you are going to want to do it do it carefully and deliberately to minimize the myriad of potential negative after effects. Trust me on this I know. Unfortunately the services that I provide tend to serve as a major catalyst in forcing that which for many is a MAJOR LIFE DECISION to either close a business or re-dedicate stakeholder resources (time, money and/or risk appetite) towards keeping an operation viable.  Although I’ve been involved with many small business successes I’ve also been involved with many business closures.  Through that process I’ve come up with a check list of action items requiring attention after your accountant quits.

When closing a business typical actions are taken. You must file an annual return for the year you go out of business. If you have employees, you must file the final employment tax returns, in addition to making final federal tax deposits of these taxes. Also attach a statement to your return showing the name of the person keeping the payroll records and the address where those records will be kept.

The annual tax return for a partnership, corporation, S corporation, limited liability company or trust includes check boxes near the top front page just below the entity information. For the tax year in which your business ceases to exist, check the box that indicates this tax return is a final return. If there are Schedule K-1s, repeat the same procedure on the Schedule K-1.

You will also need to file returns to report disposing of business property, reporting the exchange of like-kind property, and/or changing the form of your business. If you do not have a pre-printed envelope in which to send your taxes, refer to the IRS’ Where To File page for a list of addresses. Below is a list of typical actions to take when closing a business, depending on your type of business structure:

Checklist

References/Related Topics



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