Shutting down a business is often a painful experience because you’ve put your heart and soul into it. You may want it over as quickly as possible, but there is a certain process you must follow to correctly shut down your New York business.
File a final return
Federal business law requires that you file a final return for the year you shut down your business. The form you need to file depends on what type of business you have. If you’re selling your business, then you need to also submit Form 8594, Asset Acquisition Statement. Another form that you might have to file when you shut down a business is Form 4797, Sales of Business Property. You must check the tax code to know if your business qualifies.
Handle final employment compensation
Under federal business law, you must pay your employees final wages and compensation. You also need to report their employment taxes and send them W-2 forms by your final Form 941 or Form 944’s due date. If you were providing a pension or benefit plan for employees, then you need to terminate the plan as well.
Cancel your EIN
Once you have paid the taxes you owe and submitted all required IRS forms, you are ready to cancel your EIN. You must mail the IRS a letter stating why you wish to close the account, your business address, your business’s full legal name and your EIN number. Mail the letter to Internal Revenue Service, Cincinnati, OH 45999.
Hold onto records for several years
You shouldn’t shred your business records just yet. The IRS has several years to initiate an audit, which is why it’s important to maintain your records for a certain amount of time.
When you shut down a business, you still need to pay your final taxes of the year and submit any additional forms that are necessary in your situation. It’s important to check the tax code to know what to do to correctly close your business.