WASHINGTON – The Internal Revenue Service today launched a redesigned page on IRS.gov to help business owners navigate the federal tax steps when closing a business.
During this difficult and challenging time, the IRS streamlined the “Closing a Business” page into simple steps, so business owners and self-employed individuals can quickly find the information they need.
“The IRS realizes small businesses and self-employed individuals are facing challenges in their personal and business lives during these uncertain times,” said Eric Hylton, Commissioner, Small Business/Self-Employed Division. “Closing a business is a difficult decision and we want to help ease the burden for people making this tough choice. We redesigned the closing a business page on IRS.gov to help businesses comply with final tax responsibilities.”
The information includes what forms to file and how to report revenue received in the final year of business and expenses incurred before closure.
- File a Final Return and Related Forms. The type of return to file depends on whether the business is a sole proprietorship, partnership or corporation. The page features a section for each business type. Business owners can click on the section that applies to them to get the returns and forms they need.
- Take Care of Employees. Business owners with one or more employees must make final federal tax deposits and report employment taxes.
- Pay the Taxes Owed. Even if the business closes now, tax payments may be due next filing season.
- Report Payments to Contract Workers. Businesses that pay contractors at least $600 for services (including parts and materials) during the calendar year in which they go out of business, must report those payments.
- 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.
- Keep Business Records. How long a business needs to keep records depends on what’s recorded in each document.
The page also has information to help business owners who are declaring bankruptcy, selling their business and terminating retirement plans. For easy access, they can reach the page at IRS.gov/closingabiz.
- How to close a sole proprietorship
- How to close a partnership
- How to close a corporation
Schutte & Hilgendorf offers a broad range of professional accounting, tax, and audit services to individuals and businesses throughout Yavapai County and Northern Arizona. With over 40 years combined certified public accounting experience, we specialize in providing services to numerous industry specific areas, including non-profit organizations, homeowner’s associations and construction contracting. We also provide tax planning and preparation, sales tax and payroll tax return preparation, ongoing accounting/bookkeeping, live payroll, and QuickBooks setup and training (QuickBooks Proadvisors). Given our small size, we can still provide a personal touch with professional expertise. Come in and see us anytime at 2086 Willow Creek Road, Prescott, Arizona or call us at 928-778-0079.