Closing Your Business? Don’t Forget These Tax Steps

Closing a business can be overwhelming. But it’s important not to let tax duties fall through the cracks.

File a federal income tax return for your business’s final year and, if you have employees, make final federal tax deposits and report employment taxes. If you engaged independent contractors and, in your final year, paid anyone $600 or more ($2,000 for 2026, indexed for inflation after that), report the payments.

Also, cancel your employer identification number (EIN) by sending the IRS a letter with the EIN, business name and address, and reason for closing your account. Finally, retain records of your business’s tax returns, employment tax payments and any property it owned.

Here is a quick look at your final “tax to-do list”:

• File Final Returns: Ensure your federal income tax return is marked “final” for your closing year.

• Handle Employment Obligations: Make final tax deposits and report all employee-related taxes.

• Report Contractor Payments: If you paid a contractor $2,000 or more in 2026, ensure you’ve documented those payments.

• Close Your EIN: Send a formal letter to the IRS to officially retire your Employer Identification Number.

• Keep the Paper Trail: Don’t toss those files yet; retain all tax and property records for your protection.

Contact our office to review the process and develop a strategy for closing your business.
Erwin, Fountain & Jackson, P.A. — Jacksonville CPA Firm