Closing a Business in VirginiaRyan C. Young
There are numerous reasons for dissolving a business. Dissolving a business is the legal term for formally shutting down a business, sometimes the process is known as the dissolution of a business.
Small and medium-sized businesses often have more than one owner. The first step towards dissolution is having all owners sign off that the business will be closed.
Steps to Take to Close a Business
1. Once all owners have agreed to sign off and close the business, contact the Secretary of State in the state where your business is registered to determine what paperwork your business needs to file to close legally. Here is a list of Secretary of States for each state.
2. While laws vary from state to state, the usual next step in closing a business if filing a notice of dissolution with the state and local taxing authority and paying all taxes owed. The company also must file its final Federal Tax Return, pay any taxes due and check the box that indicates this is the final tax return. Make sure that all payroll taxes are current. Even if the business that is closing is a corporation, the Internal Revenue Service has the authority to hold owners liable for unpaid payroll taxes.
3. If business assets are sold when the business closes individuals and groups will have to file either Form 4797 (Sale of Business Property) or Form 8594 (Asset Acquisition Statement) with the Internal Revenue Service.
4. Most businesses hold fictitious business names, licenses and permits. To prevent fraudulent or even accidental use of the former businesses’ licenses and permits cancel all of them.
5. Close all accounts held in the business name. This includes:
• Sales Tax Accounts
• Payroll Accounts
• Bank Accounts
6. Pay all the final bills of the business; vendor bills, customer refunds, utility bills and rent.
Let all your customers and vendors know in advance that your business will be closing. Complete any outstanding client orders. After all, you want to leave with your customers and vendors thinking well of you, especially if you may be opening another business in the area at a future time. Make sure that customers and employees have a way to contact you after the business closes.
Safely store your business records and tax records for the next few years. It is a good idea to check with an attorney as to how long you need to keep them.
Hiring an Attorney
Many times individuals or groups hire an experienced business attorney to assist is the dissolution of a business. Savvy business folks do this to make sure that all steps have been taken to properly dissolve a business and protect the owner(s) from future liability.
Closing a Business | Richmond Attorney | Business Law | Ryan C. Young