1. Final Tax Return and Business Closure
You must file a final tax return to notify the IRS your business closed. Requirements and deadlines depend on the company type. For example, a sole proprietorship files a Schedule C with personal taxes. The IRS has steps when closing a business: File a final return and related forms. Take care of employees.
2. Exit Strategy Steps
An exit strategy has ten steps:
- Plan closure in advance
- Discuss strategy with partners
- Notify IRS within 30 days
- Admit it’s time to close
- Follow required process
- Protect assets and credit
- Clearly notify stakeholders
- Prevent lawsuits
- Announce intent to dissolve
- File articles of dissolution
3. Proper Business Closure
Closing a business takes weeks or months. With a plan and checklist, the process is easier. First, formally agree to close. For a corporation, hold a Board meeting. Take an official vote recorded in minutes. Get majority shareholder approval. Without enough votes, you likely can’t dissolve.
You must notify stakeholders to prevent lawsuits. Protect assets and credit. Tie up loose ends over months. Closing quickly leaves problems.
The IRS has steps when shutting down. File final returns and related forms. Notify within 30 days. Finish payroll taxes. Pay owed taxes. Continue payments after closing. Know state tax laws also apply.