How to Close a Small Business End to End: Contractors, Cleaning Companies and Trucking

What closing a small business end to end involves

Closing a small business end to end involves the state, the IRS, your state's revenue department and the agencies responsible for your licenses and permits. Payroll, sales tax and, for trucking companies, USDOT registrations each need attention. Each agency closes its own account.

A common sequence runs like this:

1. Approve the closure: the owners or members agree to close under your operating agreement or bylaws, and your lawyer can confirm the method your company uses.
2. Finish or hand off open work, and tell your customers when you'll stop and how open orders or deposits will be handled.
3. File the dissolution with your state. The filing is often called articles of dissolution; North Carolina, for example, lists Articles of Dissolution for an LLC, and our North Carolina LLC guide covers the forms in order.
4. File final returns: the IRS asks for a final return for the year you close, and your business type determines the form and whether it has a "final return" box. Our guide to closing a business with the IRS lists the forms by entity.
5. Close payroll. The IRS lists these forms for a business with employees or contract workers:
   • Form 941 or Form 944 for the quarter of your final wage payments, with the box checked to show the business has closed
   • Form 940 for the calendar year you paid final wages, with box "d" checked to show it's final
   • a Form W-2 to each employee, with Form W-3 sending the copies to the Social Security Administration
   • Form 1099-NEC for contractors you paid during the year you close; the IRS's instructions for Form 1099-NEC set the current reporting threshold

   Your state's employer accounts, such as withholding and unemployment insurance, close with the state agency that opened them.

6. Close the sales tax account with your state's revenue department, if the state registered you; New York, for example, says a final return must be filed within 20 days after you cease business operations.
7. Cancel licenses, permits and registrations, which the next section lists.
8. Close the IRS business account and EIN, the federal tax number assigned to the business: the IRS closes it once every return is filed and every tax is paid, and our guide to canceling an EIN covers the letter.
9. Keep your records: the IRS says to keep employment tax records for at least four years.

Confirm the filing list with your CPA, who can tell you which returns and forms your business still owes.

Licenses, permits and registrations to cancel

A state dissolution does not take care of every license, permit or registration. Each must be closed with the agency that issued it. The SBA lists canceling registrations, permits, licenses and business names as a separate step.

Go through your files and your bank statements for each kind of account below:

• a city or county business license, with the city or county office that issued it
• a state occupational or trade license, with the state licensing board
• a sales tax permit or certificate, with the state revenue department
• state employer accounts for withholding and unemployment insurance, with the state agencies
• an assumed name or DBA, with the office where you registered it
• federal registrations, such as a USDOT number for a trucking company, with FMCSA

If you worked in several towns or counties over the years, each one that issued you a license or permit keeps its own record, so it's worth checking old job files for every place you pulled a license.

Our pick for closing end to end: Starcycle, with your CPA and lawyer

For an LLC or corporation, we recommend Starcycle to manage the plan, deadlines, contracts, records and state filings. Your CPA prepares final returns and payroll forms, while you close license, permit, sales tax and USDOT accounts with the relevant agencies. Your lawyer handles legal decisions, including those involving debts.

Here's why it's our pick:

• A short intake of mostly yes-or-no questions builds a tailored action plan, and a simple case gets its quote online, with no calls.
• A case with more moving parts, such as several states, contracts or a lease still running, gets a dashboard and a dedicated team member working on it with you.
• Key-date tracking keeps filing windows and contract renewal dates in one place, with an automatic good-standing check across all 50 states.
• Contract and subscription cancellation is planned around each renewal date, for things like the supply order on auto-ship and the scheduling software.
• We keep filings, contracts and closure documents together and file the state paperwork. A team member reviews and approves every letter and filing before it is sent.
• Final returns are coordinated with a CPA, and we can introduce you to lawyers and accountants.

Starcycle works with U.S. LLCs and corporations, including single-owner LLCs. It's operational support for shutdowns, not a substitute for legal, tax or financial advice, so a lawyer stays in the picture for legal decisions, including debts and disputes. You can also file with each agency yourself, and our comparison of business shutdown services sets the options side by side.

Closing a contracting or construction business

A contracting business needs to close the usual business accounts as well as its trade license and job permits:

• The state contractor license, with the state's licensing board. Each board has its own form for inactivating or cancelling a license, on its own page. In California, that's the CSLB's Inactivate Your License page; in North Carolina, it's the North Carolina Licensing Board for General Contractors.
• Permits on open jobs, with the city or county building department that issued them.
• Payroll for your crew, and Form 1099-NEC for subcontractors, as described in the payroll step above.
• The state dissolution, such as North Carolina's articles of dissolution for an LLC, in our North Carolina guide.

Discuss any truck loans, equipment financing or business credit card debt with your lawyer. Our page on closing a construction company has more on the contracting side.

Closing a cleaning company

A cleaning company's closing list is shorter than a contractor's, with most of the work involving accounts and agreements. These may include monthly client contracts and recurring supply orders:

• client service agreements and recurring supply orders, ended on the notice dates each one sets
• the city or county business license, with the office that issued it
• a sales tax account, if your state registered the business, closed with the state's revenue department
• your crew: the final payroll forms, or Form 1099-NEC for contract cleaners, from the IRS list in the payroll step
• insurance and bond policies, canceled with the carrier that wrote them

The IRS's closing-a-business page lists the final-return forms by business type, including Schedule C for a sole proprietor, and the SBA's guide to closing your business covers the other steps. Your circumstances will dictate which forms you need, so confirm the filing list with your CPA.

Closing a trucking company

Selling the truck does not close the company's registrations. Alongside state and IRS accounts, a trucking company has federal registrations to close with the responsible agencies:

• The USDOT number, with FMCSA: its FAQ on inactivating a USDOT number says to submit Form MCS-150 and select "Out of Business" as the reason for filing.
• Operating authority (the MC number), with FMCSA: the same FAQ pairs the MCS-150 with Form OCE-46 where authority is active, and the OCE-46 must be notarized or signed in front of an FMCSA staff member.
• Form 2290, the IRS's heavy highway vehicle use tax return for vehicles with a taxable gross weight of 55,000 pounds or more, as an account to review with your CPA.
• IFTA and IRP accounts, with the state agency that issued them.
• The state dissolution, from step 3 above.

Our guide to deactivating your USDOT and MC numbers puts the FMCSA forms in order. If a truck loan or lease is left over after the sale, talk to your lawyer; the debts section below lists what the agencies say.

Closing a small business with debts or unpaid taxes

If the company still owes vendors, has a business credit card balance or carries other debt, talk to your lawyer before filing with the state.

What the agencies say about closing with taxes still open:

• The IRS says it cannot close your business account until you have filed all necessary returns and paid all taxes owed.
• New York wants the final sales tax return within 20 days after you stop operating.
• Illinois says to contact the Illinois Department of Revenue when closing a business to determine your tax liabilities.

Our state guides for New York, Illinois and North Carolina list each state's dissolution forms, and our guide to shutting down a company has an FAQ on closing a company that can't pay its debts. For tax obligations, confirm the filing list with your CPA.

Closing the last job well

Before the closure begins, record every state registration, license and permit, along with the office that issued it. Add payroll and sales tax accounts, agreements and renewal dates, and anything the business still owes. This gives you and anyone helping with the closure a clear account of the work ahead.

Bring that list to Starcycle for a plan and a quote. We can also introduce you to lawyers and accountants.

FAQ

How do I cancel a business license?

Contact the city, county or state board that issued it and use its own cancellation form or portal, with your license or account number. For a state trade license, the board's page has the current form, such as California's CSLB page on inactivating a contractor's license, which it describes as putting the license on hold.

How do I close my payroll account with the IRS?

The IRS lists a final Form 941 or 944 with the closed box checked, a final Form 940, W-2s with a Form W-3 and Form 1099-NEC for contractors. Confirm the list with your CPA, and see our guide to closing a business with the IRS for the details.

How do I liquidate a small business?

Selling your equipment, vehicles and stock is part of winding down, and the IRS lists Form 4797, Sales of Business Property, for reporting the sale of business property. If the business owes money, talk to your lawyer before you sell, and ask your CPA which forms apply.