Closing Your Business

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Partnerships and Corporations

Closing a Partnership

If the partnership is closed:

Indicate on Form 1065, line G(2) if it's the final return.

See winding up expenses when closing a business.

Closing a Corporation

If the corporation is closed:

Form 1120-Line E(2) is used to indicate it's a final return.
Form 1120S-Line F(2) is used to indicate it's a final return.

Notify the IRS:

The IRS must be notified of the corporation's termination by filing Form 966, Corporate Dissolution or Liquidation.

When to file Form 966:

File Form 966 within 30 days after the plan or resolution of liquidation is adopted.

State Requirements for Dissolving a Corporation

You must also comply with your state's requirement for dissolving the corporation.

A corporation must be formally terminated and state tax obligations must be up to date. It's not like a sole proprietorship, where you just stop filing Schedule C and go on your merry way.

Contact your state's Corporation Commission (or whatever the appropriate agency is called in your state) to find out the appropriate procedures to follow.