Closing a business can be a big undertaking from a financial and legal perspective. Not only must a business reach an agreement among owners that the company should be dissolved, it must also take stock of its assets, obtain a valuation, manage contacts and other obligations, cancel contracts, dispose of assets, pay off debts, and file the proper papers with the state.

In addition to the financial and legal aspects of business dissolution, there are also tax issues that must be dealt with. On its website, the Internal Revenue Service lists a number of things that businesses must do when approaching dissolution to fulfill their tax obligations. 

Among these is to file an annual tax return for the year the business ends, final employment tax returns as well as returns reporting the disposition of business property, and exchange of like-kind property. If the purpose of the business dissolution is to switch over to a new entity type, new forms will certainly need to be filed for that.

A variety of forms are available on the IRS website to be used in planning for business dissolution. This includes forms for the reporting of business asset sales and for reporting the sale or exchange of property used in the trade or business.  Navigating all of this is not easy, though, and it can be helpful to work with an experienced attorney to ensure that one files all the proper forms and that one does so correctly. Ensuring proper filing the first time around can help a company avoid problems with the IRS and ensure an overall smoother dissolution process.

Sources:

Internal Revenue Service, “Closing a Business Checklist,” Accessed Dec. 15, 2014. 

Findlaw, “Closing Down Your Business: a Chronology,” Accessed Dec. 16, 2014.