How to Close a Business in TN: Everything You Need to Know
If you need to know how to close a business in TN, the following steps will guide you through the process.3 min read
If you need to know how to close a business in TN, the following steps will guide you through the process, which will vary depending on whether your business is a sole proprietorship, partnership, corporation, or LLC.
How to Close a Sole Proprietorship
- End all business operations. If you have a brick-and-mortar location, choose a date to close the doors to all customers. Let employees know the business will be closing.
- Disburse final paychecks to employees. File the last necessary tax forms, such as income tax returns and federal unemployment. Distribute final withholding and wage information to Form W-2 employees, and report Form W-3 withholding information to the IRS.
- Pay all outstanding debts. Give notice to lenders that your business will be closing. Develop a plan to settle all accounts. If you must, sell business assets to generate extra funds to pay off debt. As a sole proprietor, you are personally responsible for all business debt, so be sure to pay them in full. Afterward, close your business accounts.
- Cancel any occupational or professional licenses. Contact the state agency in charge of occupational regulations and file any necessary paperwork to revoke your license.
- Cancel local and state business permits. To void your business permit, get in touch with the County Clerk.
- Close any tax accounts that you may have opened. You can call the Tennessee Department of Revenue to close your state account. Close your EIN account by writing a request to the IRS. Include your number and your reason for closing the account.
- If you have registered a fictitious business name, cancel it by visiting the Tennessee Department of State website, downloading the Application for Cancellation of Assumed Name, and submitting the completed form with required fee.
- Keep financial records. Even after your business has dissolved, the IRS and the state may still audit your records for three to seven years.
How to Close a Corporation in Tennessee
Closing (dissolving) a corporation in Tennessee is one step in a larger process known as the "Winding Up" process. The Secretary of State can approve Corporation Dissolution, but there are things you must do both before and after the actual dissolution.
Before the dissolution:
- Have a board of directors' meeting. Create a resolution to dissolve the corporation.
- Have a shareholders' meeting in order to approve the motion to dissolve the corporation.
- Submit a written Consent to Dissolution to the Tennessee Secretary of State.
- Submit any required annual reports to the Tennessee Secretary of State.
- Pay off any outstanding business debts.
- Pay any outstanding taxes and administrative fees.
After the corporation has been formally dissolved:
- Distribute any remaining assets.
- Close all corporate bank accounts.
- Cancel all city, county, state, and regional business licenses and permits.
- Submit IRS Form 966.
- Cancel the IRS account connected to the corporation's EIN.
The Tennessee Secretary of State does not legally require the Notice of Dissolution of a Tennessee Corporation. However, publication is a way to notify any party that may have a claim against the corporation. If someone makes a claim later on, evidence of publication might be useful in proving that the corporation had been dissolved.
How to Close an LLC in Tennessee
In order for owners to formally dissolve an existing LLC, Articles of Termination must be submitted to the Tennessee Secretary of State. If the LLC is naturally terminated after a specified period of time, as a result of LLC documents, if there are no owners lefts, or if by consent of its owners, a Notice of Dissolution is required to be submitted to the Tennessee Secretary of State.
Include any documents that show any action related to this decision. Make sure to file a final tax return with the Tennessee Department of Revenue. From this Department, you'll receive a tax clearance letter that you'll need to submit with the other necessary documents.
Once the business is legally terminated with the State of Tennessee, the company must stop conducting business and wind up its remaining obligations. Winding up includes collecting and paying off debts, selling assets, and distributing any remaining money to the members of the LLC.
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