Unfortunately due to Covid-19 about one-third of our small businesses have closed. [According to statesman.com] Our Nation’s issues have continued to change the small business sector rapidly whether it be from sickness, weather related tragedies, etc. BUT there are a few things you need to know before locking the doors. The following is an August 2022 Tax Tip from irs.gov…

There are a few things business owners need to do before they close their business. Of course, they need to fulfill their federal tax responsibilities. It’s also important to notify the IRS of their plans.

Business owners must take these steps when closing a business:

  • File a final tax return and related forms. The type of return to file and related forms depends on the type of business.
  • Take care of employees. Business owners with one or more employees must pay any final wages or compensation, make final federal tax deposits and report employment taxes.
  • Pay taxes owed. Even if the business closes now, tax payments may be due next filing season.
  • Report payments to contract workers. Businesses that pay contractors at least $600 for services including parts and materials during the calendar year in which they go out of business, must report those payments.
  • Cancel EIN and close IRS business account. Business owners should notify the IRS so they can close the IRS business account.
  • Keep business records. How long a business needs to keep records depends on what’s recorded in each document.

For further information and a complete list of the steps to take when closing a business, you can visit:

https://www.irs.gov/newsroom/what-business-owners-need-to-do-when-closing-their-doors-for-good

If you need further help with taking this step, we are here to help you! Give us a call at 606-585-0131.

The Darlings