Are You Thinking of Closing Your Business?

goingoutofbusinessSo you’ve made a decision to close your small business. Now what? There are typical actions that must be taken when closing a business. You must file an annual tax 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, you must 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 tax returns to report disposing of business property, reporting the exchange of like-kind property, and/or changing the form of your business.

Here is a list of typical tax actions to take when closing a business depending on your type of business structure.

1. Make final Federal EFTPS tax deposits

2. File final quarterly or annual employment tax forms.

3. Issue final wage and withholding information to employees

4. Report information from W-2s issued.

5. File final tip income and allocated tips information return.

6. Report capital gains or losses.

7. Report partner’s/shareholder’s allocation of gain or loss.

8. File final employee pension/benefit plan.

9. Issue payment information to sub-contractors.

10. Report information from 1099s issued.

11. Report corporate dissolution or liquidation.

12. Consider allowing S corporation election to terminate.

13. Report business asset sales.

14. Report the sale or exchange of property used in your trade or business.

Sound complicated? If so, don’t panic — this is where an experienced CPA can help you. If you have questions about starting, growing, or selling your small business, please contact us. As a CPA, Accredited Small Business Consultant, and Advanced Certified QuickBooks ProAdvisor, we specialize in working with small business owners just like you and provide tax, accounting, financial analysis, management, business planning, and small business advisory services. We can advise you on how to start, manage, grow, and terminate a small business. For more information, call (727) 391-7373 or else visit us on the web at