Closing a Business in Illinois: Everything You Need to Know
When closing a business in Illinois, business owners or members must follow numerous important steps.3 min read
When closing a business in Illinois, business owners or members must follow numerous important steps. Otherwise, unexpected consequences may result in the wake of the company's dissolution.
- File final tax returns and terminate your EIN.
- File the required dissolution documents.
- Settle any remaining tax liabilities and other debts.
- Sell any remaining inventory, property, and other assets.
- Cancel any remaining insurance policies, licenses, or permits.
General Steps for Closing a Business
The proper steps for closing a business vary based on the type of business. However, there are some universal steps and principles that must be followed in order to close the business properly, protect the business owner or owners against future liabilities, and to make certain that all obligations are correctly met so that issues do not continue to follow you after the business closes its doors.
The following steps are crucial when closing a business. If followed correctly, the process will go smoothly. However, if steps are skipped or overlooked, significant consequences may result.
- File the final tax return for your business. When a business closes, the owner must still file a tax return from the final year the entity remained in business, regardless of how much time passed during that period. For instance, if a company closed on Jan. 5, they would file a tax return for that year the following year, even though it was only open for five calendar days during that final year.
- File a final tax return for employment taxes. In addition to your income and business taxes, be sure to file your employment tax return as well. You must likewise be sure to pay your federal employment tax deposits.
- Be sure to note on all tax returns that this is the final tax return. Most returns have an available checkbox where you may indicate this. You should also then contact the IRS to notify them of your need to terminate your employer ID number (EIN).
- Process all required dissolution documents. If you fail to dissolve the operation of your business, it will continue to accrue taxes and fees since it will still be operational as far as any government entities know. This is particularly important to legally separate ownership issues when partners or multiple owners are involved. This step will help stave off confusion about liability and business ownership in the future.
- Confirm your final tax liabilities. This step will ensure that you don't leave an unpaid balance which may come back to haunt you in the future.
- Sell whatever remaining stock, inventory, and property you have. These funds can help offset other final expenses.
- Cancel any remaining insurance policies, licenses, or permits. These may be local (city, town, or county), state, or federal. Contact the issuing entity to cancel these and save yourself from future charges. Be sure to proactively cancel any business liability insurance and workman's compensation insurance, as well as notify the health care insurance provider for your employee health plan. Do likewise for any other employee benefit providers.
Closing a business is a difficult experience. It usually means the business operator is closing down due to taking a loss. Going through the steps of closing a business may be painful while in the midst of such difficult circumstances. However, by maintaining the discipline to follow these steps and properly close down a business, you will avoid unnecessary bills, unexpected liabilities, and future difficulties. Following the closure of a business, the last thing you want is for the closure to resurface over and over for years to come.
Information Specific to Illinois
While most of the steps to closing a business are universal, there are some unique and specific items for each state. Illinois is no exception. The Illinois Business Portal features a list forms and notices required to correctly cease operations for your business. Article of Dissolution Forms may be obtained from the Illinois Secretary of State's Office. Be sure to include a $5 check, payable to the Illinois Secretary of State, and mail the completed form and payment to Secretary of State Department of Business Services, Springfield, IL, 62756.
In Illinois, you must file your final income tax return by March 15 of the year following your final year in business. The Illinois Department of Revenue can help you discuss your business's tax liabilities and may be reached at (217)785-3707 or at any office location. The DOR will also help you determine if you need to file any additional forms based on your specific business.
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