There are typical actions that are taken when closing a business. 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 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:
- Make final federal tax deposits
- File final quarterly or annual employment tax form.
- Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return(PDF)
- Form 941, Employer's Quarterly Federal Tax Return (PDF)
- Form 943, Employer's Annual Tax Return for Agricultural Employees (PDF)
- Form 943-A, Agricultural Employer's Record of Federal Tax Liability (PDF)
- Issue final wage and withholding information to employees
- Report information from W-2s issued.
- File final tip income and allocated tips information return.
- Report capital gains or losses.
- Form 1040, U.S. Individual Income Tax Return (PDF)
- Form 1065, U.S. Partnership Return of Income (PDF)
- Form 1120 (Schedule D), Capital Gains and Losses (PDF)
- Report partner's/shareholder's shares.
- Form 1065 (Schedule K-1), Partner's Share of Income, Credits, Deductions, etc. (PDF)
- Form 1120S (Schedule K-1), Shareholder's Share of Income, Credits, Deductions, etc. (PDF)
- File final employee pension/benefit plan.
- Issue payment information to sub-contractors.
- Report information from 1099s issued.
- Report corporate dissolution or liquidation.
- Consider allowing S corporation election to terminate.
- Form 1120S, Instructions (PDF)
- Report business asset sales.
- Report the sale or exchange of property used in your trade or business.
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