Account: Close my business and wrap up payroll tasks

If you close your business, sell your business, or change the business entity type (for example, to or from corporation, sole proprietorship, or partnership), you must notify federal and state agencies about the change. See Payroll resources: Tools, supplies, and websites for a list of state agencies.

Note: If you are changing your business entity, you will likely need a new EIN and state tax ID number. In some situations, you may be able to carry over wages and contributions for employees. Contact us for help.

Step 1: Run your final payroll and issue last checks

Pay final wages, bonuses, commissions, reimbursements, or contributions to your employees.

Step 2: Make all outstanding tax payments

To make final tax payments

1. Go here.
   (Or choose Taxes & Forms > Pay Taxes.)
2. Make any payments you see listed.

Note: While most state and federal payments are due on the regular dates, some states require accelerated payments when a business closes. Check with your state agency to determine if you need to pay taxes sooner.

Step 3: File your quarterly forms for both federal and state

To file forms

1. Go here.
   (Or choose Taxes & Forms and then Quarterly Forms.)

2. Print the federal Form 941. Check the box on line 16, and enter the date final wages were paid indicating that your business has closed and that you do not need to file returns in the future.
3. Complete our Statement of Final Return template (Located at end of this PDF: Guide to Closing Your Business), or write your own statement. Attach this statement with your final Form 941.
4. If you file the final Form 941 electronically, send the Statement of Final Return to the IRS processing center for your state. Write “E-File” in the Comments section. Do not file a paper copy of Form 941 if you file electronically.

Look on your state form for items similar to line 16 on the 941. Not all states have checkboxes on their quarterly or annual returns. In some states, you need to file a separate termination form or continue filing "zero" returns for some period of time. Check the requirements for your state.

Step 4: Provide your employees with W-2s

When you close your business, you must provide employees with Form W-2 by the filing date of your final quarterly Form 941. Extended due dates apply for some business situations. Selling your business or changing the business type may also affect filing due dates. Talk to your accountant, tax advisor, IRS or state agency to confirm the requirements for your business.

To print W-2s for employees

1. Go here.
   (Or choose Taxes & Forms and then Annual Forms.)
2. Click W-2, Copies B,C & 2, and then click View to view and print the forms.

Step 5: File Copy A of form W-2 with the Social Security Administration

If you close your business, you must file employer Copy A of Form W-2 thirty days after you file your final quarterly Form 941. Selling your business or changing the business type might also affect filing due dates. Talk to your accountant, tax advisor, IRS or state agency to confirm the requirements for your business.

Note: We offer electronic filing of Copy A of Form W-2 starting January 1. However, if you are closing your business the deadline for filing Copy A of Form W-2 might be earlier than January, in which case you can file Copy A directly on the Social Security Administration website.

Step 6: File annual forms, including federal Form 940 and any state annual forms

Some states require early filing of annual forms when a business closes before the end of the tax year. We update annual forms as soon as they are available, but sometimes this does not happen until the last months of the year.

If you choose to terminate your payroll service mid-year, you can complete your annual filings outside of the service, for example, using your accountant's services. If you have used our service to file your tax returns and run your final payroll of the year, you can reactive your account in January to prepare and file annual returns and W-2s. We will send an email reminder when year-end filings are available.

Step 7: Cancel your service

When you are ready to terminate your payroll service account, go to the Setup page and click Cancel Service.

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