|FORTUNE Small Business:|
Filing taxes on a closed business
Ask FSB investigates the tax liabilities of a defunct business.
(FORTUNE Small Business) -- Dear FSB: I began a business about two years ago and I didn't make any money, so I left it alone. Do I need to close it out somewhere? How should I file the taxes for it?
- Corey Lewis, Indianapolis
Dear Corey: How you file depends on how you registered your business when you got started. If your company is a sole proprietorship, then you don't have to file any special taxes or do any paperwork to shut your business down, says Troy Phelps, a senior business advisor with the Indiana Small Business Development Center.
If you had it registered as an S corporation, which is typically the case for small companies, you would have to close your business by filing Articles of Dissolution. You should file your company's taxes together with your income taxes on Form 1040.
If you were registered as a C corporation, which is more often used for larger companies, you would not only have to file Articles of Dissolution, but you would also have to file separate taxes for your business.
Finally, if your business was set up as either a Limited Liability Corporation or a Limited Liability Partnership, you should consult an attorney about the right course of action, says Phelps.
Keep in mind that properly filing taxes for a failed business takes priority over doing the paperwork for closing it down, says Kamyar Shah of Columbia, Miss.-based World Consulting Group.
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