Business Dissolutions (Closures)
Even if you’ve closed your company and you’re no longer operating your business, you still need to process the correct paperwork to legally close your operations. If you have formed a corporation or LLC, have business licenses, and/or pay taxes, the state still sees you as operating, and will continue to try to get you to pay fees and taxes.
It’s your responsibility to handle the paperwork that notifies the state business resources that your business is no longer operating. That way, you are no longer required to pay these fees.
The Dissolution Paperwork You Need to Handle
Even though every business is different, yours will need to handle at least some of these administrative tasks to ensure that you are no longer on the hook for taxes or permit fees.
1. Dissolve Your Business Structure
Incorporating a business or forming an LLC was important when you started a business. Now it’s important to dissolve your business structure in the appropriate way. First, hold a meeting with your business partners or Board of Directors and ask them vote on closing the business. This vote needs to be officially recorded.
You’ll then need to file your Articles of Dissolution with your state. This document lets your state know that you are no longer operating as a corporation or LLC.
2. File Your Last Tax Return
You don’t need to wait until tax season to pay your final tax return. When you file, make sure to check the “final return” box when filing your tax forms so the IRS knows you won’t be filing future returns. You also need to report shareholder allocations (and losses) for partners on Schedule K-1.
Remember to pay any outstanding taxes, including payroll, sales, and income.
3. Cancel Business Permits and Licenses
Contact each government office where you applied for a business permit and let them know you are no longer operating. Remember: business licenses come from the city, county, and state levels, so don’t miss any of them.
Make sure to take care of all this paperwork before the end of the year to avoid penalties and to prevent the IRS or Secretary of State from sending you additional bills.
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