Guides to closing a business properly

Direct answers to the questions owners ask while closing an LLC or corporation. Each guide starts with the answer, then the detail. We file the state dissolution for a flat $75 plus the state fee; the rest of the close-out is yours, and these guides map it.

• What are Articles of Dissolution?

  Articles of Dissolution is the document you file with your state's business-filing agency, usually the Secretary of State, to formally end an LLC or corporation. It typically lists the entity's name, state file number or formation date, effective date, a statement that the owners approved the dissolution, and an authorized signature. Some states call the same filing a Certificate of Dissolution, Certificate of Termination, or Certificate of Cancellation.

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• How do I file a final tax return for an LLC?

  You file the same federal return your LLC always filed, for the short year ending when it stops doing business, and mark it final: check the 'final return' box on Form 1065 or 1120-S (and 'final K-1' on each K-1) or on Form 1120. A single-member LLC just files its last Schedule C. Then close out payroll and state returns. The state dissolution filing doesn't do this for you.

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• How do I close my EIN and IRS business account?

  You can't cancel an EIN; once assigned it stays with that entity permanently. What you can do is ask the IRS to close (deactivate) the business account: file every outstanding return and pay what's owed, then mail a signed letter with the entity's legal name, EIN, address, the reason for closing, and a copy of the EIN assignment notice if you still have it. No form, no fee.

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• How do I dissolve an LLC for free?

  You can dissolve an LLC yourself and pay nothing but the state's filing fee: $0 in some states (California charges nothing for its LLC cancellation forms), $25 in Florida, $220 in Delaware. Approve the closure, wind up, clear any tax hold your state imposes, then file the dissolution form online or by mail. 'Free' means no service fee; back taxes, late annual reports, and publication costs still apply.

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• How do I officially close a business?

  To officially close a business, you file a dissolution with the state where it was formed and then close every account and registration that was opened in its name. The working order: owner approval, state dissolution (after tax clearance where required), final federal and state returns, the IRS letter to close the EIN account, licenses and DBAs, foreign registrations, bank and merchant accounts, creditor notices, and records retention.

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• Should you dissolve your LLC before December 31?

  If you're finished with the business, yes - make the dissolution effective on or before December 31. Several states bill for any year the LLC exists on their record: California's $800 annual tax accrues until the LLC is cancelled, and Delaware charges its full $400 annual tax for a company that survives even one day of the new year. A December effective date stops next year's bill before it starts.

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