Closing out the old business

The short version

• After an asset sale, your old company still exists. It holds any cash and debts not sold, and it has to be closed properly.
• Pay remaining bills, final payroll and final taxes.
• File final tax returns and close your tax accounts.
• Dissolve the company with your state, and cancel licenses and registrations that did not transfer.
• Keep your records. You may need them for years.

Why this step exists

In an asset sale, the buyer buys the business's assets but not the company itself. Your company is left behind, holding whatever was not sold. It still has obligations until you close it. Lesson 8.6 covers the two structures.

After a sale of the company itself, the company passes to the buyer, and most of this lesson does not apply. Your personal tax filings still do.

The checklist

Money

• Pay remaining bills and any debts not paid at closing.
• Collect any receivables you kept.
• Close business bank accounts once everything has cleared.

Payroll

• Run final payroll for anyone not moving to the buyer.
• File final payroll tax returns.

Taxes

• File final federal and state income tax returns for the company, marked as final.
• File the purchase price allocation on IRS Form 8594, if the sale was an asset sale.
• File final sales tax returns and close sales tax accounts.
• Some states require a tax clearance before or after a sale. Your accountant will know.

Legal

• Dissolve the company with your state's business filing office.
• Cancel business licenses, permits and registrations that did not transfer.
• Cancel insurance, but ask first about coverage for claims made after closing for work done before it.

Records

• Keep financial, tax and employment records. Your accountant and attorney can tell you how long.