Closing Your Business

 

There are a few administrative items that you should complete if you sell, close, or move your business out of Encinitas. Checking off these items will help make sure you don't continue to receive mail or tax renewal documents from various government agencies.

 

City Requirement

Notify the City of Encinitas Business Registration Program at 760-633-2708 or email [email protected]

 

State Requirements – Payroll Taxes

Employee Development Department - If you have employees when you close your business, you will need to provide them with information about Unemployment Insurance Benefits. Within ten days of closing your business, you will also need to file a Payroll Tax Deposit and Quarterly Contribution Return and Report of Wages in order to close your employer payroll tax account. 

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State Requirements – Seller’s Permit

California Board of Equalization - If you have a Seller's Permit and are closing or selling your business, be sure to close out your account with the California Board of Equalization (BOE). This is applicable to businesses that sell goods or products that require a sales tax. You will need to complete a Notice of Close Out form and file your final return. The BOE has created a Closing Out Your Seller’s Permit guide and provides additional instructions online to help you navigate this process.

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State Requirements – State Taxes

Franchise Tax Board - To indicate that you will no longer be paying state taxes for your business after the current tax year, check the "Final Return" box on your current year tax return, and write "final" across the top. Make sure that you won't be conducting business in California after the tax year and keep your records on file as all tax returns are subject to audit until the statute of limitation expires.

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State Requirements – Dissolving your Business Entity

Secretary of State - If you are a corporation, partnership, or limited liability company that incorporated your business entity with the Secretary of State, you may file a Certificate of Cancellation and/or Dissolution, depending on your business type. 

To ensure that all issues are considered and addressed appropriately, you should consult with private legal counsel prior to submitting termination documents to the California Secretary of State.

Many documents are returned without being filed because of name issues, errors, omissions or misstatements - make sure to carefully spellcheck your paperwork and review the Filing Tips for additional information.

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Federal Requirements

Internal Revenue Service - When you close or sell your business, you will still need to file an annual return for the year. If you have employees, you will also file final employment tax returns and make federal tax deposits. Additional returns may need to be filed to report capital gains/losses, disposing of business property for other items depending on the nature of your business. The IRS Closing a Business checklist provides more information and the necessary forms.

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