You can’t just clean out the office and lock the doors when you shut down a business. The IRS has requirements.
It may be adding insult to injury, but you’ll face a lot of tax-related paperwork when you close your company’s doors for good. The IRS requires that you tie things up neatly as you move on to your new venture. It would take several QuickBooks training classes to thoroughly explain all of these; this is an overview.
The steps you’ll need to follow depend largely on the type of business structure involved, and they’re very much like the paperwork you regularly submit to the IRS every year. In some cases, your cleanup work just involves a simple checkmark.
For example, if you have a partnership, corporation, S corporation, LLC or trust, you’ll need to check the box near the top of the annual tax return that indicates that this will be the final return for that entity. Same goes for Schedule K1s.
If you’re closing down a business, be sure to check the box next to Final return.
Employer Documents Needed
You were most likely still in business during the 2012 tax year if you’re submitting your final paperwork now. So you must still account for your income and expenses from that year. Official forms and schedules for 2012 should have been finalized by January 30, 2013.
If you had employees, you’ll need to submit your final federal tax deposits, as well as your quarterly or annual employment tax form(s). These can include the Form 940 (unemployment), 941 (quarterly federal tax return), 944 (annual federal tax return) and 943 (for agricultural employees). If you used a version of QuickBooks payroll, this data should be easy to obtain.
Employers must also account for wages, taxes and tips. Even if you shut down the third week of January, 2012, you must still remember to send out W-2s and 1099-MISCs to employees and contractors, and Forms W-3, 8027 and 1096 to the IRS.
And you also need to wrap up the financial reporting for any employee pension or benefit plans. This information is reported on the Form 5500, which is a joint effort of the IRS, the Department of Labor and the Pension Benefit Guaranty Corporation. This form has several related schedules.
Multiple entities developed the Form 5500 and its assorted schedules.
Additional Required Paperwork
If you studied income taxes in a QuickBooks class, you’re probably aware of how complex business tax returns are. In addition to the employee-related forms mentioned already, you’ll have to wrap up 2012 by submitting other documentation that reports on, for example:
- Partner and shareholder shares
- A corporate dissolution or liquation
- Property your business sold or exchanged, and
- Assets you acquired.
Form 8594, Asset Acquisition Statement
If you’ve been conscientiously processing all of your company’s financial data in QuickBooks, this momentous task will be much easier. You may still want to consult with an accountant to ensure that all of the loose ends are tied up neatly.