Closing up shop is an emotionally draining experience. It’s important to keep a level head and ensure that the necessary bases are covered. Among the most important steps to take are:
- Dissolving legally. You must file formal, legal dissolution documents, or you may be liable for taxes and filings. (Consult your attorney on how to file.) Also, when you file federal and state income tax returns, check the “final return” box.
- Canceling licenses, permits and business names. Also close your EIN account with the IRS. Close your business bank account and cancel business credit cards.
- Paying salaries before the door closes. To comply with state employment and labor laws, final paychecks must be paid by the employees’ last day of work or soon after. You may also be required to pay employees for unused leave. Consult your attorney for details in your state.
- Paying taxes and debts. Inform federal and state tax agencies that your business is closing. Also, let them know you will cease to file unemployment returns and quarterly tax forms. Notify all lenders and creditors of your plans to close the business. Settle remaining debt (or prepare for a bankruptcy filing).
- Keeping records. You may be legally required to maintain records from the past 3 to 7 years.