First, ensure all federal tax obligations are fulfilled, including filing tax returns and paying outstanding taxes. Cancel the EIN if applicable. File Form 966 to notify the IRS of the LLC’s intent to dissolve. If there are remaining assets, report them on the final tax return. Keep proper documentation for future reference. Seek guidance from a tax professional or the IRS website.
To close an LLC, file a final tax return with the state and IRS. Check the box to show this is the final return. Fill out Schedule K-1 and give a copy to each member.
Dissolution ends your LLC’s official existence with the authorities. How you dissolve depends on why it’s closing – administrative, voluntary or judicial. Administrative is where the state removes power and authority for failing to comply with requirements like not paying franchise tax or providing an annual report on time.
Paying quarterly taxes to the federal government is required since you pay self-employment tax on LLC income.
To dissolve an LLC, file “Articles of Dissolution” with the state it’s formed in. File a final return and related forms. Take care of employees. Report contractor payments. Cancel your EIN and close the IRS business account. Keep records. Every California LLC must pay an $800 annual tax until you cancel with the Secretary of State (SOS), even if not conducting business.
For a single-member LLC, follow the procedure from your state attorney general to close it. Single-member LLCs file returns using IRS Form 1040 and Schedule C.
How do I notify the IRS of a business closure? Send a written letter to the IRS office that handles your tax returns, including the date of closure, reason for closure, and contact information, stating you have ceased operations.
The EIN will still belong to the business after the account is closed. To close an IRS business account, send a written letter to: Internal Revenue Service, Cincinnati, OH 45999.
File dissolution documents with your state or local government to deregister a legal name.
Notify the IRS and file final tax returns. For unincorporated businesses, use Form 1040 and Schedule C.
When dissolving an LLC do you need to fill out IRS Form 966? Yes, file final returns and Form 966.
Attach a dissolution plan to Form 966 for an S corporation. Mark the final 1120S return as such. Indicate “Final K-1” on shareholders’ last Schedule K-1.
Sole proprietors use Schedule C and Form 1040 to report profits and losses. Partnerships file a final Form 1065.