CLOSE your business

Do you want to close your business?

Closing your business, also known as liquidation or dissolution, is the process in accounting by which a business is brought to an end for different reasons and by different processes. The assets and property of the company are sold or transferred.

People close their businesses for many reasons. Sometimes it’s because the business hasn’t gone in a direction they had hoped and they’re not happy with the result. Sometimes it’s because the owner is ready for something new, sometimes it’s due to time or money considerations, and sometimes it’s due to death. Regardless of the reasons, choosing to close a business is a significant decision. However, going out of business does not always require closing the business or liquidation.

A business exit is an entrepreneur's plan to sell his or her ownership interest in a company. An exit gives a business owner a way to reduce or liquidate his stake in a business and, if the business is successful, make a substantial profit. If the business is not successful, an exit plan enables the entrepreneur to limit losses. An exit may also be used by an investor such as a venture capitalist in order to plan for a cash out of an investment.

Sell: Selling requires careful planning—everything from cleaning up sloppy books and tax records to dressing up a tired storefront and updating old operating systems—even ramping up marketing to juice sales and command a higher asking price.

IPO (Initial Public Offering): Initial public offering is a type of public offering in which shares of a company are sold to institutional investors and usually also retail investors; an IPO is underwritten by one or more investment banks, who also arrange for the shares to be listed on one or more stock exchanges.

Merge: A merger is the combination of one or more business entities into a single business entity. The joining of two or more companies is often to achieves greater efficiencies of scale and productivity.

Close: Liquidation or dissolution is the process in accounting by which a business is brought to an end for different reasons and by different processes. The assets and property of the company are redistributed.

The U.S. Small Business Administration has an online resource to assist you in understanding the considerations and closure process: Getting Out. Additionally, it may be helpful to meet with a business advisor to address alternatives to closing, such as selling your business in whole or in part, hiring a manager and taking a less active role, merging with another business, etc. The following programs offer no-cost business advising:

• Small Business Development Center (statewide)
• SCORE (statewide)
• Washington Center for Women in Business (Puget Sound area)

Steps to closing a business:

1. Seek legal advice

You’ll need sound counsel to understand your obligations regarding business closure notifications, contracts, and debts. If you don’t have an attorney, ask your accountant or other trusted advisors for recommendations, or refer to the Washington State Bar Association’s Lawyer Directory.

Potential issues to discuss with your attorney:

• Outstanding salaries, wages, commissions, vested benefits due to employees, if applicable. When all debts can’t be paid, debt to employees is considered legally to be high priority.
• Outstanding loans and lender requirements.
• Outstanding contracts, including leases, service agreements, purchase agreements, warranties, employment contracts, etc.
• Disposal of assets, especially where business property has been used as collateral for a loan or where you intend to convert business property to personal use.
• Tax debt, recognizing that most taxing agencies have the legal authority to assign business and employment tax debt to the owners (or former owners) of the business.
• Creditors – While all individuals and businesses have obligations to pay their debts, corporations and LLCs have special requirements related to notifying creditors of closure.
• Bankruptcy – If bankruptcy is a consideration, legal advice is critical for learning what debts can be discharged through a bankruptcy process and how you should proceed.

2. Notify regulatory agencies

Federal

Internal Revenue Service (IRS)

• Follow the Closing a Business Checklist.
• If bankruptcy is a consideration, review the Declaring Bankruptcy web page.

State

Department of Revenue (DOR)

• Complete the Business Information Change Form or close your account online using My DOR.
• DOR will share the closure information with Business Licensing, the Employment Security Department, and the Department of Labor & Industries.
• Complete your final DOR Excise Tax Return within 10 days of business closure. Note on the return that the business has or will close and provide a closure date.
• If inventory is being converted to personal use, pay use tax on the cost of the inventory (unless sales tax was paid previously).
• Keep your business records for five years in case your business is selected for an audit.

Employment Security Department (ESD)

• Complete the Business Change Form and ensure ESD has updated contact information for you.
• Complete your final Quarterly Report within 10 days of closing your business.
• Carefully review and respond to notices that will come from ESD if any of your former employees apply for unemployment benefits.
• Complete your final Paid Family and Medical Leave quarterly report.

Department of Labor and Industries (L&I)

• Complete your final Quarterly Report.
• If a contractor, send written notice to L&I’s Contractor Registration Division:
  Email: contreg@lni.wa.gov
  Fax:    360-902-5812
  Mail:   Dept. of Labor & Industries
             PO Box 44450
             Olympia, WA  98504-4450
• Your contractor bond must remain in effect for two years beyond the contractor registration expiration date (which is typically later than the business closure date).

Secretary of State

• Corporation
  • Complete and submit the DOR Revenue Clearance Certificate Application form to verify that all excise tax returns have been filed and taxes have been paid.
  • Complete and submit Articles of Dissolution, or for a foreign (non-Washington) corporation, Statement of Withdrawal, attaching the Revenue Clearance Certificate received from DOR. All dissolution and withdrawal filings are available online.
• Limited Liability Company (or other limited liability organization)
  • Complete and submit a Certificate of Dissolution, or for a foreign (non-Washington) LLC, Statement of Withdrawal. All dissolution and withdrawal filings are available online.

State Certified Businesses

• Office of Minority and Women’s Business Enterprises (OMWBE)
  • If you are certified with OMWBE as a woman owned or minority owned business, contact our office to remove your company from the certified firm directory. Call our toll-free number at (866) 208-1064.
• Department of Veteran Affairs
  • If you are certified as a veteran owned business, contact our office to remove your company from the certified business list. Call our toll free number at (800) 562-0132 and press 1 for assistance.

Liquor and Cannabis Board

• If the business you are closing sold liquor, vapor products, tobacco products, or cannabis, contact your enforcement officer through our website http://lcb.wa.gov/enforcement/contact-your-officer or call Enforcement customer service at (360) 664-9878. For licensing application queries, please call (360) 664-1600.

Department of Health

• If your business is in a profession licensed through the Department of Health, notify the Department that your business is closing.

Department of Licensing

• If your business is in a profession licensed through the Department of Licensing, notify the Department that your business is closing.

Local

Notify the cities or towns and counties where you do business. Complete final tax returns (Business & Occupation for cities; property tax for counties).

3. Notify other interested parties

Notify employees, lenders, insurers, vendors, service providers, landlords, customers, and other interested parties of your intent to close the business. If money is due to them, pay it or provide information about how and when you will pay.

Corporations and LLCs are required to inform creditors that the company has (or will be) dissolved, provide a mailing address to send claims, and provide a deadline to submit claims. Notice to creditors includes a required published notice of the dissolution requesting claims against the dissolved business be handled a specific way as provided or described in Chapter 23B.14 RCW. LLCs may have a different set of requirements in Article VIII RCW 25.15.

Taking care of your employees
Employers and employees that lose employer sponsored health insurance qualify for a special enrollment period to enroll in an individual plan on Washington Healthplanfinder. Depending on their income and household size, employees separating from their employers may qualify for reduced monthly premiums or low cost/free coverage through Washington Apple Health (Medicaid). Individuals must report a loss of coverage and enroll in a new plan on Washington Healthplanfinder within 60 days of losing employer sponsored coverage.

For questions on coverage options contact smallbusiness@wahbexchange.org

4. Closure of business due to death

Notify the following state agencies if you are closing a business due to a death. Not all agencies will be listed in this section. If an agency is not listed they do not have a special process for a business to follow when closing due to death.

Liquor and Cannabis Board (LCB):

WAC 314-07-100 pertaining to Death's for the WSLCB.

Death or incapacity of licensee.

• (1) The appointed guardian, executor, administrator, receiver, trustee, or assignee must notify the board's licensing and regulation division in the event of the death, incapacity, receivership, bankruptcy, or assignment for benefit of creditors of any licensee.
• (2) Subject to a criminal background check, the board may give the appointed guardian, executor, administrator, receiver, trustee, or assignee written approval to continue liquor sales on the licensed business premises for the duration of the existing license and to renew the license when it expires.
• (3) When the matter is resolved by the court, the true party(ies) of interest must apply for a liquor license for the business.

RCW 66.24.025 for transferring of license that could be due to death.

Transfer of license - Fee - Exception - Corporate changes, approval - Fee.

• (1) If the board approves, a license may be transferred, without charge, to the surviving spouse of a deceased licensee only if the parties were maintaining a marital community and the license was issued in the names of one or both of the parties. For the purpose of considering the qualifications of the surviving party or parties to receive a liquor license, the *liquor control board may require a criminal history record information check. The board may submit the criminal history record information check to the Washington State Patrol and to the identification division of the Federal Bureau of Investigation in order that these agencies may search their records for prior arrests and convictions of the individual or individuals who filled out the forms. The board shall require fingerprinting of any applicant whose criminal history record information check is submitted to the Federal Bureau of Investigation.
• (2) The proposed sale of more than 10% of the outstanding and/or issued stock of a licensed corporation or any proposed change in the officers of a licensed corporation must be reported to the board, and board approval must be obtained before such changes are made. A fee of $75 will be charged for the processing of such change of stock ownership and/or corporate officers.
•  

        *Reviser's note: The "state liquor control board" was renamed the "state liquor and cannabis board" by 2015 c 70 § 3

Department of Revenue (DOR) - Business Licensing Services (BLS) Taxes:

DOR will need to be notified, depending on the business activity, the ownership structure, etc.  For specific questions about this, please contact DOR – Business Licensing Service at 360-705-6741 or DOR – Taxpayer Services at 360-705-6705. 

Department of Labor and Industries (L&I):

If the business has an open workers’ compensation account, a written notification of the change is required. If the business is a registered contractor, a copy of the death certificate to remove an LLC member/manager, corporate officer, or partner from the registration is required. In the event that the contractor business is a partnership, the business must be re-registered.

Employment Security Department (ESD):

If you're closing the business due to death, please submit a Business Change Form closing the business. You can provide a copy of the death certificate so no one will try to contact you, but it’s not required.

If there has been a death of a business partner and you decide to continue with the business that has multiple business partners in a partnership or LLC, follow the same process as one above, with a 5208C-2 Update Ownership Form so the account can be updated. There are no requirements from ESD for notification (sending death certificate, etc.).

Secretary of State (SOS)

There is no notification of death needed. However, if the business is sold or assumed by others, then an annual report, or amended annual report may be needed to update the list of governors for the entity. Both annual and amended reports are available online at http://www.sos.wa.gov/corporations-charities.

Department of Licensing (DOL)

Depending on the types of licenses granted to a business, notification of closure due to death may be as simple as notification of the administrating program/agency or may be more prescribed, with specific instructions that must be followed.

Basic Notification- Copy of Death Certificate

If the business closing has any of the following license types, the administrating program only expects to be notified of the closure due to death:

• Cosmetology, Tattoo (Except Cosmetology Postsecondary School)
  

  Program Contact: Cosmetology/Tattoo Program Department of Licensing PO Box 9026 Olympia, WA 98507 Email: plssunit@dol.wa.gov Phone: (360) 664-6626 / Fax: (360) 664-2550

• Auctioneer and Auction Company
  

  Program Contact: Auctioneer Program Department of Licensing PO Box 9026 Olympia, WA 98507 Email: plssunit@dol.wa.gov Phone: (360) 664-6626 / Fax: (360) 664-2550

• Combative Sports
  

  Program Contact: Combative Sports Program Department of Licensing PO Box 9026 Olympia, WA 98507 Email: plssunit@dol.wa.gov Phone: (360) 664-6644 / Fax: (360) 570-4956

• Security Guard Company
  

  Program Contact: Private Security Guard Program Department of Licensing PO Box 9649 Olympia, WA 98507-9649 Email: security@dol.wa.gov Phone: (360) 664-6611

• Private Investigator Agency
  

  Program Contact: Private Investigator Program Department of Licensing PO Box 9649 Olympia, WA 98507-9649 Email: security@dol.wa.gov Phone: (360) 664-6611

Detailed Notification

If the business closing has any of the following license types, specific instructions must be followed to properly close the business:

(Please review and follow the instructions for each applicable license type)

• Vehicle Dealer
  

  Program Contact: Dealer & Manufacturer Services Department of Licensing PO Box 9039 Olympia, WA 98507-9039 Email: dealers@dol.wa.gov Phone: (360) 664-6466 Instructions: A business can be closed by a request put in writing and faxed or emailed. If the license will expire more than 60 days from close of business, the dealership is to return the license and all special plates to the department within 10 days of termination. This can be done either by mail or by contacting a dealer investigator to pick them up. If the license is sent by mail, it must be accompanied by a signed statement from the licensee that it is being voluntarily surrendered. The dealer or an authorized representative should sign either on the license or a separate paper indicating the voluntary surrender of the license. In the case of death of the principal or owner of the business: The personal representative of the dealer must apply for new application and license fees for authority to "wind the business down" and close it over six months. If the personal representative is assuming an LLC/Corporation, the representative can forego the application but must submit fingerprint cards and a personal/criminal history statement form. Instead of the representative taking over the business, they may choose to consign the inventory to another dealer. If this is the case, they have 30 days to do so. The program will assign a person to assist in these processes. If an owner becomes incapacitated, in addition to the above, we require a statement of power of attorney if someone is acting on behalf of the dealer.

• Registered Tow Truck Operator/ Dealers/ Limousine Carriers/ Vehicle Transporters/ Taxi/For Hire Vehicles/ Snowmobile Dealer
  

  Program Contact: Limousines Department of Licensing PO Box 9039 Olympia, WA 98507-9039 Email: dealers@dol.wa.gov Phone: (360) 664-1389

  Instructions: The license and special plates must be sent or delivered to the department, or a dealer investigator can be contacted to pick up the license within 10 days of termination of the business.

• Vehicle Hulk Haulers/Scrap Processors
  

  Program Contact: Dealer & Manufacturer Services Department of Licensing PO Box 9039 Olympia, WA 98507-9039 Email: dealers@dol.wa.gov Phone: (360) 664-6466

  Instructions: The license and special plates must be sent or delivered to the department, or a dealer investigator can be contacted to pick up the license within 10 days of termination of the business. WAC 308-65-160

• Vehicle Wreckers
  

  Program Contact: Dealer & Manufacturer Services Department of Licensing PO Box 9039 Olympia, WA 98507-9039 Email: dealers@dol.wa.gov Phone: (360) 664-6466

  Instructions: The wrecker must, within 10 days of terminating the business, return the license and special plates to the department. WAC 308-63-130

• Scrap Metal Processors, Suppliers, Recyclers
  

  Program Contact: Scrap Metal Program Department of Licensing PO Box 9649 Olympia, WA 98507-9649 Email: scrapmetal@dol.wa.gov Phone: (360) 664-6611

  Instructions: The scrap metal business must, within 10 days of terminating the business, return the license and special plates to the department. WAC 308-70-220

• Vessel (Boat) Dealers
  

  Program Contact: Dealer & Manufacturer Services Department of Licensing PO Box 9039 Olympia, WA 98507-9039 Email: dealers@dol.wa.gov Phone: (360) 664-6466

  Instructions: Submit to the department (the envelope must state "Attn: Dealer Services Program"): Notification that the business is closing The vessel dealer registration that was issued by the department.

• Manufactured Home/Travel Trailer Dealer/Vehicle Manufacturer/Wholesalers/ Miscellaneous
  

  Program Contact: Dealer & Manufacturer Services Department of Licensing PO Box 9039 Olympia, WA 98507-9039 Email: dealers@dol.wa.gov Phone: (360) 664-6466

  Instructions: The license and special plates must be sent or delivered to the department, or a dealer investigator can be contacted to pick up the license within 10 days of termination of the business.

• Appraisal Management Company
  

  Program Contact: Appraisal Management Company Program Department of Licensing PO Box 9021 Olympia, WA 98507-9021 Email: dolbpdamc@dol.wa.gov Phone: (360) 664-6504

  Instructions: Complete and send to the department the Designated Controlling Person Closing Company Affidavit form.

• Cosmetology Postsecondary School
  

  Program Contact: Cosmetology Program Department of Licensing PO Box 9026 Olympia, WA 98507 Email: plssunit@dol.wa.gov Phone: (360) 664-6651

  Instructions: Send to the department: Where records will be kept for the required 3 years Contact information for each enrolled student (address, phone, email) Proof students are supplied with a refund for any remaining tuition due Proof student hours are terminated from the online reporting system Copies of all final student monthly reports Documentation of which students owe the school tuition for hours already earned Contact information regarding the representative for the school Bond information

• Driver Training School
  

  Program Contact: Driver Training School Program Department of Licensing PO Box 9027 Olympia, WA 98507-9027 Email: tse@dol.wa.gov Phone: (360) 664-6692

  Instructions: Complete and submit DTS Closing Report found at https://dol.wa.gov/forms/view/661017/download?inline Enter all course completions into the Secure Access Washington (SAW) portal Return school's license and copies of instructor license to the department DTS program Provide the department a list of any students that have not completed your course Provide the department a student record for any student that has not completed the course If closing a testing location: verify all test scores have been entered into the SAW portal verify and confirm that all unused copies of the knowledge and skills exam forms have been destroyed

• Bail Bond Agencies
  

  Program Contact: Bail Bond Program Department of Licensing PO Box 9649 Olympia, WA 98507-9649 Email: security@dol.wa.gov Phone: (360) 664-6611

  Instructions: Business continues to be obligated on all outstanding bonds until the director receives notification from the jurisdiction in which the agency/branch offices are located that all bonds have been exonerated. The department of licensing has received no complaints from indemnitor about the return of collateral. The director may require an audit of the closing agency at any time upon notification of the closing of the agency.

• Scrap Metal Business
  

  Program Contact: Scrap Metal Program Department of Licensing PO Box 9649 Olympia, WA 98507-9649 Email: scrapmetal@dol.wa.gov Phone: (360) 664-6611

  Instructions: Within ten business days of the closure of a scrap metal business, the business must return the license and the special license plates to the department for cancellation.

• Funeral Establishment
  

  Program Contact: Funeral and Cemetery Licensing Department of Licensing PO Box 9012 Olympia, WA 98507-9012 Email: funerals@dol.wa.gov Phone: (360) 664-1555

  Instructions: Handle prearrangement funeral service contracts in accordance with RCW 18.39.250(8). Notify the department.

5. Need assistance?

State of Washington Small Business Liaisons can help you get the information and resources you need. Also, help us improve the Small Business Guide by filling out a short, confidential survey.