Got an Inactive Business? Start Your Dissolution Paperwork to Avoid Penalties

If 2015 brought the end of a business for you, don’t sweep it under the rug. You’ve still got legal responsibilities to handle to avoid penalties and fees.

How the State Sees You

Even if you’re no longer operating your business, if you have formed a corporation or LLC, have business licenses, and/or pay taxes, the state still sees you as operating, and will continue to try to get you to pay fees and taxes. It’s your responsibility to handle the paperwork that notifies the state business resources that your business is no longer operating. That way, you are no longer required to pay these fees.

The Dissolution Paperwork You Need to Handle

Even though every business is different, yours will need to handle at least some of these administrative tasks to ensure that you are no longer on the hook for taxes or permit fees.

1. Dissolve Your Business Structure

Incorporating a business or forming an LLC was important when you started a business. Now it’s important to dissolve your business structure in the appropriate way. First, hold a meeting with your business partners or Board of Directors and ask them vote on closing the business. This vote needs to be officially recorded.

You’ll then need to file your Articles of Dissolution with your state. This document lets your state know that you are no longer operating as a corporation or LLC.

2. File Your Last Tax Return

You don’t need to wait until tax season to pay your final tax return. When you file, make sure to

check the “final return” box when filing your tax forms so the IRS knows you won’t be filing future returns. You also need to report shareholder allocations (and losses) for partners on Schedule K-1.

Pay any outstanding taxes, including payroll, sales, and income.

3. Cancel Business Permits and Licenses

Contact each government office where you applied for a business permit and let them know you are no longer operating. Remember: business licenses come from the city, county, and state levels, so don’t miss any of them.

Make sure to take care of all this paperwork before the end of 2015 to avoid penalties, and to prevent the IRS or Secretary of State from sending you additional bills.


Need to dissolve your business? CorpNet can help. We make filing your Articles of Dissolution painless. Contact us to find out how.


2018-02-23T07:24:01+00:00 October 29th, 2015|Categories: Maturity and Exit|Tags: |

About the Author:

Nellie Akalp
Nellie Akalp is an entrepreneur, small business expert, speaker, and mother of four amazing kids. As CEO of CorpNet.com, she has helped more than half a million entrepreneurs launch their businesses. Akalp is nationally recognized as one of the most prominent experts on small business legal matters, contributing frequently to outlets like Entrepreneur, Forbes, Huffington Post, Mashable, and Fox Small Business. A passionate entrepreneur herself, Akalp is committed to helping others take the reigns and dive into small business ownership. Through her public speaking, media appearances, and frequent blogging, she has developed a strong following within the small business community and has been honored as a Small Business Influencer Champion three years in a row.

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