Closing a Business in PA: Everything You Need to Know
Steps involved in closing a business in PA depends upon your business structure and the city or county your business is located in.3 min read
2. Closing Your Corporation Tax Account
3. How to Close a Sole Proprietorship Business in Pennsylvania
4. Notify all government agencies:
5. Notify the insurers:
6. Notify your creditors and customers:
7. Notify about the business name closure:
8. Dissolving an LLC: Tax Clearance Requirement
Steps involved in closing a business in PA depends upon your business structure and the city or county your business is located in.
Make sure you have satisfied all the filing requirements and paid off all tax liabilities. You can call 717-783-8434 to contact the Bureau of Collections and Taxpayer Services and find out whether anything is pending from your side. Close all the revenue and tax accounts of your business, including sales tax, corporation tax, and employer withholding accounts.
Closing Your Sales Tax, Employer Withholding, and Miscellaneous Tax Accounts:
- You can close your sales tax, employer withholding, and miscellaneous tax accounts online by logging in to your e-TIDES account. The option will be available under the "Enterprise Maintenance" section.
- You can also close these accounts by filing Form REV-1706 for business or account cancellation. You may either mail this form to the address mentioned on it or fax the form to 717-787-3708.
Closing Your Corporation Tax Account
- When you decide to close your corporation tax account, mark your last RCT-101 return as final, and include Form REV-861 showing disposition of assets.
- If you've distributed the assets in-kind to shareholders, attach a copy of Form 1099-DIV to the REV-861 schedule of assets disposition.
- If you have sold the assets before liquidation, include a copy of Schedule D filed with the IRS (Internal Revenue Service).
- If you are claiming an exemption for capital gains under Section 337A of the IRC (Internal Revenue Code), you must also include a declaration to the schedule.
If you do not mark your last RCT-101 return as final, you must follow some additional steps:
- If your business is not registered with the DOS (Department of State), submit Form REV-238 (affidavit for out of existence or withdrawal). This form includes a schedule of distribution of assets.
- If your business is registered with the DOS, you must apply for a tax clearance certificate in Form REV-181. You will have to submit this certificate to the Department of State along with the final Articles of Dissolution. If you have sold the assets before dissolution, you must also obtain a bulk sales clearance certificate.
After obtaining tax clearance certificates, complete the dissolution paperwork with the DOS. The DOS website contains more information on the types of forms you need to file. You can also contact Pennsylvania DOS at 717-787-1057 for further assistance.
How to Close a Sole Proprietorship Business in Pennsylvania
A sole proprietorship business has only one owner. Winding up a sole proprietorship business is fairly easy.
Notify all government agencies:
- Notify all the concerned federal, state, and local tax authorities about your business closure.
- File a final Schedule C to notify the IRS. You need not mark your return as "final" for a sole proprietorship business.
- Calculate the profit or loss on the disposal of business land, building, and equipment. You must include this profit or loss in the final Schedule C that you file with the IRS.
- If you have any employees, you would be filing payroll taxes with the federal, state, and local authorities. Mark all the last tax forms as "final."
Notify the insurers:
Notify your insurers about the closure of your business. Inform them how you plan to settle any outstanding premiums or get premium refunds, if any.
Notify your creditors and customers:
- Notify your creditors, suppliers, customers, and all other people you do business with.
- Settle all the outstanding payments.
- Inform them about your last date of operation. You may want to issue a notice in newspapers and on your company website.
Notify about the business name closure:
If you've been doing business under a different name than your personal name, notify the relevant state and local authorities that you are closing down the business under the said name, with effect from the specified date. This will be especially helpful in avoiding any liability arising out of your business name after you cease operations, say for instance, if someone else starts doing business with that name.
Dissolving an LLC: Tax Clearance Requirement
For dissolving an LLC in Pennsylvania, you must pay all your pending state taxes, and obtain tax clearance from revenue and labor and industry departments. File an application in Form REV-181 separately to each department. It may take more than a month to receive your tax clearance certificates.
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