Closing a corporation takes as much paperwork as starting one. Unlike a sole proprietorship or a partnership, even a one-person corporation is legally a separate taxpayer. Filing a final corporate tax return is only part of the work involved. Drafting a closing-a-business checklist can help you keep track of what needs to be done.
When you're closing a corporation, you have to complete all final tax returns and paperwork: employee taxes, W-2s, 1099s, employee tip income, and benefit plan tax returns. The documents also include IRS form 966 for corporate dissolution.
Businesses fold for lots of reasons. Owners become sick. The business doesn't earn enough money. Keeping it going demands too much time. With a one-person small proprietorship, closing the doors is often simple: Settle any outstanding debts or contracts and then stop doing business. A corporation, even if it's a one-person show, takes much more paperwork.
Advertisement Article continues below this adIf you have shareholders, they have to vote to dissolve the company, according to Wolters Kluwer. Usually, the board of directors drafts a resolution, and then the shareholders vote on it. If you own the entire company, this process is a formality. Next, you file the certificate of dissolution with the state government. Your state's secretary of state website should have details of the process and the required fees.