Tax Considerations when Closing a Business
Tax Tip:
Closing a business is a major turning point, but don’t forget to wrap up your tax obligations before moving on to your next chapter. File a federal income tax return for the business’s final year, and, if you had employees, make all required final federal tax deposits and file employment tax returns.
Payments of $2,000 or more (indexed for inflation starting next year) to independent contractors must also be reported. In addition, formally close your IRS account through a written request that includes your EIN, business name and address, and the reason for closure.
Finally, be sure to keep records of your business’s employment tax payments and any property owned. You also should generally retain tax returns forever and supporting records for at least three years after filing your last return, which covers the IRS’s standard statute of limitations. (But in some circumstances, it’s longer.)
This material is generic in nature. Before relying on the material in any important matter, users should note date of publication and carefully evaluate its accuracy, currency, completeness, and relevance for their purposes, and should obtain any appropriate professional advice relevant to their particular circumstances.
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