Tuesday, February 17, 2015

Close A Small Business That Didn'T Make Any Money

File the right forms with the IRS and state authorities to close your business.


When your business isn't producing a profit, or it no longer interests you, it may be time to close up shop. Even if your business didn't make money, you must follow the proper legal steps to avoid future liability and expenses. If your business was a corporation or a partnership, the closing process can be complicated, but some steps won't be applicable if your business is a sole proprietorship. Consult with a small business attorney if you have questions about whether a final report or procedure applies to you.


Instructions


1. Give notice that your business is closing to employees if you have them. Make sure that your employees are paid for the hours they work by your last day of business. If you're a small business with just one or two employees, then federal and state laws pertaining to notice, final wages and benefits may not apply to you. Check with your attorney if you have one or more employees, and aren't sure which laws apply to your business.


2. Refer to your business formation documents if your business is a corporation or a partnership. If you have partners or co-owners you must come to a joint decision to close the business. Follow the steps you agreed upon with your partners or co-owners to dissolve your business. Divide equipment or merchandise with your co-owners, or sell it and share the proceeds, per your agreement.


3. Write to the state authority where you registered your corporation or partnership to notify it that your business is closing. Cancel any business permits and licenses issued by your local government to run your business.


4. File final tax returns with the Internal Revenue Service, and with your state revenue authority if applicable. Follow the Closing a Business Checklist on the IRS website (see the Reference section) to make sure that you file your final tax returns and reports correctly. Report asset sales to the IRS when you file your final return if you decide to liquidate equipment or merchandise. File your business receipts and documents and store them in a safe place in case you need them for legal purposes in the future.


5. Notify customers by letter or email that you're going out of business. Complete any existing jobs on your schedule. Remember to cancel future orders and appointments for your products or services.


6. Inform creditors that your business is closing. Close business bank accounts and credit cards. If you owe suppliers, make arrangements to pay off your accounts, and be sure to cancel future orders in time to avoid charges. Cut off your business phone. Delete your business websites and social media accounts.