When closing a California business, you must file the final employment tax returns in addition to making final federal tax deposits of these taxes if you have employees. You must also file an annual tax return for the year you go out of business and attach a statement to your return showing the name of the person keeping the payroll records and the address where those records will be kept.
The annual tax return for an S corporation, corporation, partnership, limited liability company or trust includes check boxes near the top front page just below the entity information. For the tax year in which your business no longer exists, check the box that indicates this tax return is a final return. If there are Schedule K-1s, repeat the same procedure on the Schedule K-1.
You will also need to file returns reporting the exchange of like-kind property, reporting the disposition of business property and/or changing the form of your business.
Depending on your type of business structure you have, below is a list of common actions to take when closing your business:
• Issue payment information to sub-contractors.
• Report information from 1099s issued.
• Report the sale or exchange of property used in your trade or business.
• File final employee pension/benefit plan.
• Issue final wage and withholding information to employees
• Report information from W-2s issued.
• File final tip income and allocated tips information return.
• Report capital gains or losses.
• Report partner’s/shareholder’s shares.
• Consider allowing S corporation election to terminate.
• Report business asset sales.
• Make final federal tax deposits
• File final quarterly or annual employment tax form.
• Report corporate dissolution or liquidation.
• Closing a Business
• Canceling an EIN – Closing Your Account
• Contact state and local agencies because there may be requirements relating to state and local governments as well.
• The SBA also provides advice on closing a business.