Once you’ve officially decided to dissolve your business, you will need to notify the proper officials, starting with your state government office.
Upon filing dissolution paperwork with the state government, you will no longer be liable for business taxes or other filings in your state. This action also puts creditors on notice that your business can no longer assume business debt. This is particularly important in a partnership, where more than one person can incur debt on behalf of the whole business. Read Dissolving a Business Partnership for more information on this topic.
Dissolutions particulars vary from state to state and sometimes by individual business. So prior to filing, it is always best to consult with a legal advisor or state official who can provide you with detailed instructions for your state.
Once the dissolution papers required by your state have been filed, your dissolution will become official. Next you’ll need to cancel all permits and licenses held with the state or county. It is important to contact the issuing agency to officially cancel all permits and licenses; you don’t want to risk someone else using a permit or other license previously associated with your name.
In addition, if you’ve been using an assumed business name, file an “abandonment” of the name and publish it in your local newspaper. Forms for business name abandonment, which should be available at your local county clerk’s office, are filed in case someone else should use your business name in the future. If a legal conflict arises, this will verify that you are no longer legally tied to the name.
After officially dissolving your business through the proper state paperwork and canceling all licenses or permits, you’ll need to address any remaining issues with your state or county taxes. If you have employees, pay your final payroll tax and file the final employment tax paperwork on time.
Once that’s done, officially notify all levels of tax authorities that you’re going out of business. IRS Forms 940 and 941 have boxes that let you indicate you will not be filing future employment tax returns under your business’s name. In addition to the immediate taxes, at the end of the year you’ll need to file the appropriate income tax and business collected sales tax forms. Be sure to indicate on each form that it will be your last time filing.
When dissolving a business, take all of the necessary steps to legally unbind yourself from everything associated with the business. To avoid penalty fines, be sure to file all required paperwork in a timely manner. This will allow you to leave your business knowing that everything has been handled and that your legal responsibility has been fully relinquished. You can also read Who Must Be Notified of an Impending Business Closure? for more information on to whom and how to give notice.