When making the decision to dissolve a business, it is important to keep in mind that there are a variety of important requirements that must be met. There are important steps to properly close a business that can relate to the business structure as well as other important tax and legal requirements it is necessary to fulfill.
It is important to remember to file an annual tax return for the business the year that it is dissolved. For the tax year that the business has been dissolved, you can check the box on the form to indicate that the return is a final return.
For businesses that have employees, and, of course, many do, the process of dissolving a business may require additional requirements including filing final employment tax returns. Additional payroll and tax requirements may also be required. It is also necessary to file tax returns related to disposing of business property and some other types of changes.
Requirements for closing a business can depend on the type of business structure you have.
Depending on the circumstances, it is also important to report capital gains or losses, partner shares, corporate dissolution or liquidation, business asset sales and
the sale or exchange of property used in your business, among taking other important steps that may be required according to the specific circumstances of the business.
Because of the potentially complex tax requirements necessary to dissolve a business, it is important to have a strong knowledge of any requirements that apply to your business. Becoming familiar with, and educated concerning, the requirements is likely a common process for many business owners that is repeated throughout the course of business ownership and the life of the business.
Source: Internal Revenue Service, “Closing a Business Checklist,” Accessed Dec. 29, 2014