There is no question that the coronavirus pandemic has made it impossible for many businesses to keep their customers, and therefore keep afloat. In some cases, the best option you have to save the money you have now is to close your business in the short term, so you can eventually build a new business in the future.
Closing a business, however, requires a number of steps with the Internal Revenue Service (IRS) to ensure that you have properly squared away all of your federal tax issues before closing. Thus, whether you run a sole proprietorship, partnership, or corporation, an experienced tax professional can help you manage this difficult task.
In this article, we will go through the six steps you need to take when closing a business. By making sure that you properly close a business, you will be able to move forward so you can once again be an entrepreneur when this pandemic is over. If, after reading this article, you would like to discuss your own business tax circumstances, we invite you to call the IRS problem-solving services firm in Sarasota, the Law Office of Mary E. King, P.L.
The Law Office of Mary E. King, P.L. can make sure that your tax issues are resolved efficiently and at the lowest cost to you. Please fill out our online contact form, or call us at 941-906-7585 today.
1. First, See if You can Stay Open With Available Tax Relief
Before you make the final call to close your business, you should make sure that there are no other options available to you. In that regard, you would be wise to contact our offices – the Law Office of Mary King, the IRS problem-solving services firm in Sarasota, to get an insight about what tax relief options are available to you.
There are a number of business tax credits, and other tax relief options expressly due to Covid-19 that might allow you to keep your business running. So, by consulting with an experienced tax attorney, you can make sure that you have left no stone unturned with regard to keeping your business viable.
2. Filing a Final Tax Return
If you know that you are ready to close and that there are no tax relief options that make sense for your business, then you first need to file your business’ final tax return for the year that you close your business.
The kind of return that you file, and all the related forms, depends upon the kind of business you have. A sole proprietor will typically use a Schedule C along with his or her individual tax return and indicate that the business will be closed. You may also need to file other forms like a Form 4797 (Sale of Business Property), or Form 8594 (Asset Acquisition Statement) if you sell your business.
If you have a partnership, then your business should be filing a Form 1065 (U.S. Return of Partnership Income). If you have a corporation, then your business should likely be filing a Form 966 (Corporate Dissolution or Liquidation).
3. Final Employees Paychecks, Payments to Contract Workers
If you have employees, you need to make sure that you provide any final wages, and you also must make final tax deposits and report employment taxes. Finally, you need to provide a Form W-2 to each employee, and file the appropriate forms on terminating any retirement plans, health savings accounts, or other tax-favored plans. You also need to use Form 1099 for any compensation over $600 you paid to non-employee contract workers.
4. Pay Your Taxes
Not surprisingly, if you owe money after filing your tax return, you will need to pay those final taxes that you owe.
5. Cancel EIN, Close IRS Business Account
Because your employer identification number (EIN) is a permanent federal taxpayer ID with a related IRS business account, you will need to send a letter to the IRS office in Cincinnati, OH, that states:
1. Legal name of the business
2. The business EIN
3. The business address
4. The reason you want to close the account
Note that you cannot close your business account until you have filed all the necessary returns and paid all taxes you (as a sole proprietor) or the business owes.
Finally, you want to make sure that you hold on to your records for a period of time. With property records, you want to keep them during the period of time during which you can amend your tax return to claim a credit or refund, or the IRS can assess additional taxes. Also, you will want to keep all employment tax records for at least four years.
Let the IRS Problem Solving Services Firm In Sarasota Help You With The Difficult Task Of Closing Your Business
We are all struggling through this pandemic that does not seem to have any end in sight, and closing a business takes an emotional toll that can make it hard to take care of all the details. Let the Law Office of Mary E. King help you with this difficult process, and help you get ready to open a new business when the time comes.
Consider reaching out to the IRS problem-solving services firm in Sarasota, Mary E. King, to help. Tax matters can be complicated, and thus, it is always helpful to have someone in your corner who understands the tax law and deals with the IRS on a regular basis. Indeed, beyond just the stimulus payment from the IRS, there could be other issues with which a seasoned tax attorney can help.
So, when it comes to dealing with tax relief and tax litigation, you need to talk to a Sarasota tax defense attorney who can help. Mary E. King has spent her career concentrating on tax law and can help you with tax scams in Florida and elsewhere. Attorney King has a wealth of information about what types of options would make the most sense for you and your business.
That helps explain why she’s received an A+ rating from the Florida Better Business Bureau. If you have a tax-related issue – no matter how small or how large – setting up an initial consultation with Mary E. King, tax lawyer of Florida, is the first step you should take towards relief.
The Law Office of Mary King P.L. offers complete IRS problem-solving services including all areas from tax debt settlement to planning the most efficient tax strategy for individuals and businesses. Call us today to schedule an initial consultation. With years of experience as a tax lawyer in Sarasota for many clients, Attorney Mary E. King can make sure that your tax issues are resolved in your favor. Fill out our online contact form, or call us at 941-906-7585. Remember, at the Law Office of Mary E. King, we are focused on solving your tax issues for good.