January 18th, 2021

Small businesses owners continue to face challenges from the pandemic’s effects. Closing a business is an extremely difficult decision, especially with all the daunting hurdles and paperwork involved to do it properly. Ignoring it all, or simply walking away, can and will cause more tax headaches in the long run. Fortunately and unfortunately, Tax Defense Ohio can help with all of that. When you’re done reading, we invite you to contact us to set up an appointment.

IRS.gov Page for Closing a Business

The IRS redesigned the closing a business page on IRS.gov to help businesses comply with final tax responsibilities. This includes the forms to file and how to report revenue received in the final year of business and expenses incurred before closure.

  • File a Final Return:  File based on whether the business is a sole proprietorship, partnership or corporation. Business owners can find the necessary forms applicable to them.
  • Employees: Business owners with one or more employees must make final federal tax deposits and report employment taxes.
  • Pay Taxes Due: Even though you’re closing this year, tax payments may be due next filing season.
  • Contract Workers: Businesses that pay contractors at least $600 for services (including parts and materials) must report those payments even though you’ve closed.
  • Cancel EIN and Close IRS Business Account: The IRS cannot close out an account until the business has filed all necessary returns and paid all taxes owed. Otherwise, you could still be assessed new tax liabilities.

Resources

Check out IRS.gov/closingbiz to find all the information you need, or work with us and we can help do this. Also, you cannot forget about your State and Local government authorities, as many of these actions must also occur to close a business.