Closing your business can be a difficult choice to make. Kentucky SBDC Business Coaches can provide local guidance in closing your business and dissolving your legal entity, if applicable.  It’s also recommended to seek advice from your CPA and attorney.

Follow these steps to closing your business.

1. 1. Seek Advice: You will need the advice of your attorney and tax professional in formally beginning the steps to close your business. If you have partners or co-owners you will need to follow the steps you’ve agreed upon in business articles filed with the Secretary of State.
      
      
   2. Organize and maintain your records: You are required to maintain tax and legal records for your business for up to seven years. Additionally, your financial records will be requested by state and lending officials.
      
      
   3. Notify your employees, and follow worker protection rules: If you are an employer, you need to comply with state and federal laws. The State Rapid Response Team, part of the Kentucky Office of Employment and Training, is responsible for receiving employer notifications pursuant to the federal Worker Adjustment and Retraining Notification (WARN) Act. In most cases, a Rapid Response team member coordinates on-site services involving dislocated workers, employers, the community and other local resources and services available to help the employer manage the layoff and identify the specific needs of the affected employees.
      
      
   4. File with the Secretary of State: When a corporation wishes to cease doing business, Articles of Dissolution must be filed with the Secretary of State if authorized by statute. Articles of Dissolution for a business corporation must comply with KRS 271B.14-030, and Articles of Dissolution for a nonprofit corporation must comply with KRS 273.313. A LLC must file Articles of Dissolution and comply with KRS 275.285. A partnership must file a Statement of Dissolution and comply with KRS 362.801-807. You should consult your attorney and tax professional for further guidance on required filings, or you may be held liable for taxes, fees and other financial obligations.
      
      
   5. Cancel permits and licenses: If your business required any permits or operational licenses, you will need to contact your board of licensure to cancel those licenses.
      
      
   6. File with the Department of Revenue: A business entity that ceases to operate in Kentucky has certain tax responsibilities to facilitate the closure of business tax accounts. A Kentucky Corporation and/or Limited Liability Company that is no longer operating is required to file a “final” corporate and/or limited liability entity tax return in order for those tax accounts to be closed; other business tax accounts may be cancelled by utilizing the 10A104 Update to Business Information or Cancellation of Kentucky Tax Account(s) form. For a business that files sales and use tax returns, the Sales Tax Permit must be returned to the Kentucky Department of Revenue.
      
      
   7. Close existing business accounts: You need to notify all creditors and lenders if you have outstanding debt, and will need to work with them on a settlement arrangement. If you are unable to reach a settlement you should consult your financial professional, and/or attorney.
      
      
   8. Incentive Programs: If you have active incentive programs with the Cabinet for Economic Development, contact the Office of Financial Services/Compliance Division at 502-564-4554 or 800-626-2930 to notify the Cabinet that your business is closing.
      
      
   9. IRS Checklist – On this page, you’ll find the steps you’ll need to take to close your business from a federal tax perspective regardless of your business type and information to help you take care of your employees. 

    

2. Remember to cancel all insurance policies, bank accounts, and lines of credit associated with your business when you close.