HOW DO I CLOSE A COMPANY IN THE USA

Like starting your business in the United States, closing a company in the USA (particularly as a foreigner) can be an emotional one. However, no matter the reason behind the decision to close your business, please take note that doing so is not limited to stopping business activities. There are other legal and tax procedures to follow while doing so. This process is also known as dissolving a company.

In this article, we will be considering what you need to know about how to close a company in the USA and we will be considering it from both the legal and tax angle.

HOW TO CLOSE A COMPANY IN THE USA

Before we proceed with the list, it’s important to take note of the following;

1. The procedure for closing a company in the USA varies from state to state

2. The procedure and requirements for closing a company in the USA also depend on the type of entity your business is registered with. It is therefore advisable that you speak with your lawyer as well as other experts such as accountants and tax consultants, bankers, and the IRS to have a holistic view of what the process and requirements entail.

3. Where your business is formed by more than one partner, the consent of the other partner or co-founder is required for your dissolution process to be successful.

Having said that below is a list of the procedures for dissolving your US company:

A. File for dissolution with the State in which the company is registered. Filing for dissolution entails completing statutory forms as well as paying statutory fees for the application process. As stated earlier, the procedure and statutory fee requirement will vary from State to State. A certificate of cancellation is issued after the filing process is completed.

B. Cancel your EIN and close your IRS business account. All pending returns and taxes owed must be paid otherwise your IRS business account cannot be closed. To cancel your EIN and IRS business account, you are required to provide the following;

  • The complete legal name of the business
  • The business EIN
  • The business address
  • The reason you wish to close the account
  • Copy of IRS notification letter assigning your EIN

C. Pay whatever taxes you owe

D. Cancel registrations, permits, and licenses you don’t need. This could save you renewal fees you will be obliged to pay should you fail to make the cancelations

E. Keep all records related to your dissolved business. This includes tax records, employment records, property records, etc. It is important to do this after dissolving your company for future reference. How long you are required to do so depends on the kind of document in question. It is advised that such records be kept on average for about four years.

WHAT HAPPENS IF I FAIL TO CLOSE MY COMPANY IN THE USA?

In simple terms, failure to comply with the legal procedures for closing your company in the USA will cost your business more money as the latter will be exposed to taxes and returns despite not being in operation.

In some States, your US Company will be administratively dissolved should the latter fail to pay the annual State fee for 2 years.

CONCLUSION

Closing your US company goes beyond seizing operations to satisfying certain legal requirements. It is therefore important that you secure advice from a lawyer who has a firm grasp of US laws as well as your US accountant and tax consultant to get an all-around view of what the process entails so that you can make an informed decision.

Need to close down your US company? Feel free to reach out to us here or through the Whatsapp icon on this page, and we will respond to you.

 

 

 

Cynthia Tishion
Cynthia is a lawyer and currently serves as Head of Corporate / Commercial Services at LEX – PRAXIS. With her passion for business and entrepreneurship, she is actively engaged in creating awareness on the legal aspect of businesses through various platforms such as writing, public speaking engagements.
Cynthia Tishion

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