In Tennessee, closing a sole proprietorship entails a number of procedures and regulations. You are liable for all of your company’s obligations and debts because, as a lone proprietor, you are its only owner. To prevent any financial or legal repercussions if you decide to close your firm, you must adhere to the rules established by the state of Tennessee.
Step 1: Submit your final tax return You must submit your final tax return to the state of Tennessee before ending your business. The Tennessee Franchise and Excise Tax Return, Form FAE 170, is the appropriate document to use for this. All of your company’s earnings and outlays up to the closing date should be listed on this form. If your company sold taxable products or services, you could also need to submit a final sales tax return.
Before ending your company, you must revoke any licenses or permissions you may have obtained for it. You should get in touch with the relevant organization that provided the license or permission and adhere to their cancellation policies. This will stop any additional fees or penalties brought on by non-compliance in the future.
Step 3: Inform Your Staff, Vendors, and Customers You should let your staff, suppliers, and clients know that your company is closing. A professional letter or email can be used for this, and it should include the reason for the closure, the date of the closure, and any pertinent details like refunds, unpaid invoices, or upcoming services.
Step 4: Pay Off Your Debts and Other Obligations You should satisfy all outstanding obligations and liabilities before liquidating your business. This includes settling any outstanding loans, credit card debt, taxes, and other obligations. Any contracts or agreements that are no longer required should be canceled as well.
In Tennessee, you can use a PO Box for your LLC. But you also need to include a physical address for your company, which can be either your home address or a business address. For your LLC to be registered with the state, as well as to receive legal notices and other vital documents, a physical address is necessary.
The excise tax, or LLC tax, is present in Tennessee. This tax is determined at a rate of 6.5% for the first $3 million and 7% for earnings over $3 million and is based on the net earnings of your LLC. Every year, on the 15th day of the fourth month following the end of your LLC’s fiscal year, you must pay the excise tax.
A certificate of good standing is not required if your company is closing. To demonstrate that your company is in accordance with state laws and has no unpaid debts or liabilities, you might need to get a certificate of good standing if you are selling your company or transferring control. A certificate of good standing is issued by
For companies registered in Tennessee, the Secretary of State’s office issues certificates of good standing. A formal request and a fee are required in order to get a certificate of good standing. The certificate will contain the status of your company, the date of registration, and any other pertinent information.
A letter of good standing may be issued by the Department of Revenue or the Secretary of State’s office in Tennessee.
When an LLC dissolves, its debts and liabilities do not instantly vanish. Prior to distributing any residual assets to the LLC’s shareholders, any existing debts and obligations must be satisfied from the LLC’s assets. The LLC’s creditors may be able to go after the owners for payment if the LLC’s assets are insufficient to pay off its debts. In order to make sure that all debts and obligations are handled appropriately, it is crucial to wind down and dissolve an LLC effectively.