File payroll taxes

If you have staff, you'll have to file final employment tax returns and make final federal deposits of those taxes. You are personally liable for these taxes, even if your business has run out of money. If you can't pay, try to negotiate a settlement with the IRS.

I recommend: Use Form 941 and Form 940 to pay final pay wage and unemployment taxes. If you need to hire a lawyer to negotiate with the IRS, you can find one online at Lawyers or FindLaw.

Decide whether to sell all assets together

If you sell the business, you'll have to pay taxes on capital assets, real estate and inventory.

I recommend: If you sell business assets piecemeal, you should file Form 4797. If you sell all of your assets together, consider filing Form 8594. The IRS's Publication 544 provides additional guidance. You might need to consult a tax lawyer to calculate the amount owed.

Notify tax authorities

File a final annual return with the IRS and your state tax authority. Partnerships, corporations, S Corporations, limited liability corporations or trusts include a box near the top front page; check this box to indicate the tax return is the final one. If you're a sole proprietor, you can just stop filling out Schedules C and SE.

I recommend: For additional information about required paperwork, the IRS publishes a checklist of steps necessary to close a business.