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Category: Tax
Satisfied Customers: 5842
Experience:  CPA with tax experience.
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I started my first business in October 2008. Its a failure

Customer Question

I started my first business in October 2008. It's a failure and I need to wrap it up. It's an LLC with 3 total LLC Partners (meaning the partners are LLCs). We didn't have any income in 2008, but we did have some investment dollars. We paid ourselves 'advances' in the interest of avoiding having to do a full 2008 tax return. In 2009, I never did my form 941 quarterly. I need to do most of this myself because of expenses, but if I could get an outline of what I should start with, this would help.
Submitted: 5 years ago.
Category: Tax
Expert:  JKCPA replied 5 years ago.
Sorry to hear your business did not do well. You will need to file your Form 941's for the quarters of 2009 that you paid wages to employee(s). Time is of the essence as large penalties and interest can accrue. Employment taxes are considered a trust fund account, so the IRS is not very lenient when these taxes are paid late. The tax when withheld from the employee's pay must be paid to the IRS within the established deadlines. If the tax has not been paid, a late deposit penalty, late filing penalty, late payment penalty and interest will be added to the amount of tax you owe. The first two quarters of 2009 will be late but you have until 10/31/09 to file your 3rd quarter Form 941 timely. You should download the Form 941 from the website and make the appropriate payroll tax deposits for Withholding and FICA as soon as possible. If you are able to make the deposits electronically, that is the best way to pay IRS. Otherwise, please see IRS Circular E (Pub. 15) for more information.

Also, don't forget to file your Form 940 for 2009 (due 1/31/2010) for FUTA taxes.

To close your LLC:
  1. File a document called Articles of Dissolution or Certificate of Dissolution with your state's Department of Revenue or Secretary of State's office. This document is usually available on your state's website, and there is typically a small fee required.

  2. Pay off any debt the LLC owes. This includes paying vendors, employees and any outstanding loans. If there is not enough money to pay off all loans, you should consult an attorney.

  3. Notify all clients and vendors that you will no longer be conducting business.

  4. Return the LLC's cash reserves to the owners. If there is no money left or if there is not enough money to return everyone's investment, you will need to reach an agreement on how the money will be divided. Consult a lawyer, who will assist you in mediation as well as draw up any necessary paperwork.

  5. Notify the IRS that the LLC is no longer in operation by shutting down the Employer Identification Number (EIN) through the IRS website.
  6. Contact the county in which the business is located and cancel your business license. Do not just let it expire because you might be assessed additional fees or taxes even though your business is no longer in operation.
  7. File the proper paperwork with the Internal Revenue Service to report final paychecks and retirement plan funds.
  8. Report the sale of any assets, buildings, property or office equipment to the IRS
  9. File your final income tax return(s) (Form 1065 if you are taxed as a partnership or 1120/1120S if you are taxed as a C-corp/S-corp). When you do so, make sure to mark the box that says "Final Tax Return."
Please remember to click on the green "Accept" button below as I will not get credit for my answer if you don't. Thanks and good luck!

Edited by J. Michael Knoebel on 10/2/2009 at 12:47 AM EST
Category: Tax
Satisfied Customers: 5842
Experience: CPA with tax experience.
JKCPA and 3 other Tax Specialists are ready to help you
Customer: replied 5 years ago.
Ok- great information. I'm goinig to accept this answer, and would like to pay you some more for a little more info regarding withholdings for employees. Can you tell me how I can open a new ticket to ask you / pay you directly without going back into general pool?
Expert:  JKCPA replied 5 years ago.
Thank you very much. I'm glad I could help. I'm not sure how you'd ask me directly. You could try putting "This is for jkcpa only" in the title of your new question. If someone else trys to answer, just don't accept their answer unless you like it I guess.

Edited by J. Michael Knoebel on 10/2/2009 at 4:17 PM EST

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