When closing a business in California, there is much to do. Some of the following suggestions may require help from your tax attorney or CPA.
You must file an annual return for the year you go out of business. If you have employees, you must file the final employment tax returns, in addition to making final federal tax deposits of these taxes.
The annual tax return for a partnership, corporation, S corporation, 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 ceases to exist, 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 to report disposing of business property, reporting the exchange of like-kind property, and/or changing the form of your business. Below is a list of typical actions to take when closing a business, depending on your type of business structure:
Make final federal tax deposits
Electronic Federal Tax Paying System (EFTPS)
File final quarterly or annual employment tax form
Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return
Form 941, Employer’s Quarterly Federal Tax Return Form 943, Employer’s Annual Tax Return for Agricultural Employees
Form 943-A, Agricultural Employer’s Record of Federal Tax Liability
Issue final wage and withholding information to employees
Form W-2, Wage and Tax Statement
Report information from W-2s issued
Form W-3, Transmittal of Income and Tax Statements
File final tip income and allocated tips information return
Form 8027, Employer’s Annual Information Return of Tip Income and Allocated Tips
Report capital gains or losses
Form 1040, U.S. Individual Income Tax Return
Form 1065, U.S. Partnership Return of Income
Form 1120 (Schedule D), Capital Gains and Losses
Report partner’s/shareholder’s shares
Form 1065 (Schedule K-1), Partner’s Share of Income, Credits, Deductions, etc.
Form 1120S (Schedule K-1), Shareholder’s Share of Income, Credits, Deductions, etc.
File final employee pension/benefit plan
Form 5500, Annual Return/Report of Employee Benefit Plan
Issue payment information to sub-contractors
Form 1099-MISC, Miscellaneous Income
Report information from 1099s issued
Form 1096, Annual Summary and Transmittal of U.S. Information Returns
Report corporate dissolution or liquidation
Form 966, Corporate Dissolution or Liquidation
Consider allowing S corporation election to terminate
Form 1120S, Instructions
Report business asset sales
Form 8594, Asset Acquisition Statement
Report the sale or exchange of property used in your trade or business
Form 4797, Sales of Business Property
Contact local and California state agencies.
Speak with a California business attorney about this and your other business questions. Call Mitchell A. Port.