2022-08-10
There are a few things business owners need to do before they close their business ( https://www.irs.gov/businesses/small-businesses-self-employed/closing-a-business ). Of course, they need to fulfill their federal tax responsibilities. It’s also important to notify the IRS of their plans. http://ow.ly/ZOfq50KbJYC
Business owners must take these steps when closing a business:
- File a final tax return and related forms. The type of return to file and related forms depends on the type of business.
- Take care of employees. Business owners with one or more employees must pay any final wages or compensation, make final federal tax deposits and report employment taxes.
- Pay taxes owed. Even if the business closes now, tax payments may be due next filing season.
- Report payments to contract workers. Businesses that pay contractors at least $600 for services including parts and materials during the calendar year in which they go out of business, must report those payments.
- Cancel EIN and close IRS business account. Business owners should notify the IRS so they can close the IRS business account.
- Keep business records. How long a business needs to keep records depends on what’s recorded in each document.
- IRS.gov has information to help guide business owners through the process of shutting down. Small businesses and self-employed taxpayers can find information including:
- What forms to file
- How to report revenue received in the final year of business
- How to report expenses incurred before closure
Business owners can also get helpful information on declaring bankruptcy, selling their business and terminating retirement plans.