If you are looking to change or restructure your business entity or are in the process of closing your business, you must take the steps to formally close your current business which will meet the IRS regulations. Any time you are no longer operating under a specific EIN (Employer Identification Number), that EIN number must no longer be open. Otherwise, the IRS will think that you are still in business, and you can unfortunately get penalties for not filing the proper tax forms that are due. Here is a checklist that the IRS requires for proper closing of a business:
1. Make your final federal tax deposits (through EFTPS).
2. File your quarterly or annual employment tax form. (Can be Form 940, 941, 943 or 943-A).
3. Issue final wage and withholding information to your employees (Form W-2).
4. Report the information to the IRS from the W-2s issued (Form W-3).
5. File final tip income and allocated tips information return, if required (Form 8027).
6. Report any capital gains or losses (reported on either Form 1040, Form 1065, or form 1120 (schedule D).
7. Report partner's/shareholders shares (reported on either Form 1065 or Form 1120S).
8. File final employee pension/benefit plans. (form 5500).
9. Issue payment information to sub-contractors (Form 1099-MISC).
10. Report infromation from 1099s issued (Form 1096 sent to IRS).
11. Report corporate dissolution or liquidation (Form 966).
12. Consider allowing S corporation election to terminate (Form 1120s).
13. Report business asset sales (Form 8594).
14. Reprot the sale or exchange of property used in your trade or business. (Form 4797).
This list is the list the IRS uses for a checklist for your business, and depending upon which type of business you operate, certain forms are relevant or not. This checklist is also to be used when you are restructuring or changing your business type, since you are actually closing that EIN and will be getting another another EIN for the new type of business.
Other requrirements you may need to check are with your state and local agencies. States may require you to fill out forms to close your old business, especially if you are required to pay any state or local taxes. Check with your state in regards to this.
Copyright Jeanine Pfeiffer