Canceling Business Licenses and Permits

When you go out of business, you don't want to forget to remove yourself from business and tax records. No matter what kind of business you have, you probably applied for some sort of license, permit, or registration. For example, your business might've obtained a seller's permit to collect sales tax or a liquor license to sell cocktails.

When dissolving your business, you'll need to make sure you close your business's tax accounts, licenses, permits, and registrations.

What Licenses, Permits, and Registrations Does My Business Have?

When you started your business, you likely applied for one or more licenses, permits, and registrations. These licenses and permits could be related to your business activities, location, or name. You might've applied for these licenses and permits with your city, state, or federal agency.

Some common licenses, permits, and registrations your business might have include:

• a DBA (short for doing business as) registration—also called a "fictitious" or "assumed business name" registration or certificate
• general business license
• seller's permit (also called a "sales tax license" or "resale certificate")
• professional or occupational license
• licenses for selling or providing products and services (such as a gambling license or food and wine permit)
• employment tax accounts, and
• building permits.

You might have multiples of the same type of license. For example, some cities require an operating license for every business location. So you have two stores, you'd have two licenses. Make sure you cancel these licenses for every location, if necessary.

Why Bother Canceling Permits and Licenses?

It can be time-consuming to call or visit various government offices and file forms to cancel all of the registrations, permits, and licenses you have. But it's important to complete this step of the business closure process.

By canceling your business's permits and licenses, you're ending your liability for state, city, or county fees and reporting requirements. Also, it rids you of any liability attached to the permit or license in case anyone should use it. For instance, if you don't cancel your seller's permit, you could be responsible for any taxes and penalties incurred after you no longer operate the business if someone else were to get hold of your seller's permit number and use it to buy goods at wholesale, skipping the sales tax.

Take stock of all of your business licenses, permits, and registrations so you can keep track of them as you close them out. You might be able to transfer some licenses to another person or company. If you need help canceling or transferring a license, permit, or registration, consider working with a local business attorney. They can guide you through the process and make sure you've completed all the necessary steps to end your liability.

How to Cancel Each License or Registration

Oftentimes, you can cancel a license or registration online. But sometimes you'll have to call a government department or submit a paper filing to close an account or end a registration.

Cancel Your Business Name Registrations

When you started your business, you might've registered a business name with your state or local government. It's common for sole proprietors and general partnerships to register a DBA instead of using the owners' personal names to do business.

Likewise, many corporations, limited liability companies (LLCs), and other registered entities use an alternate name to their legal name. For example, a corporation might file articles of incorporation under the name ABC Corp. but do business under The Alphabet Soup Company.

Many states require you to register your DBA by filing paperwork at the state or local level. If you stop using your DBA because you're closing your business, you should file a form of abandonment of the business name with the same agency you registered with. Some agencies require you to also publish the abandonment in a local newspaper for several weeks.

Regardless of whether you're required to submit a notice of abandonment, it's a good idea to file this paperwork. Cutting ties with the business name can help limit your liability if someone were to use your business name to:

• sign a contract
• file for a license
• apply for a business loan, or
• legally tie your business to another obligation.

By officially ending your association with your DBA, you're sending a message that the name is no longer tied to you. Keep in mind that once you cancel your DBA registration, anyone can register that same business name—you no longer have a claim to it.

Cancel Your Tax Accounts and Licenses

One of the most important steps to closing your business is closing your tax accounts to end your tax obligations. Typically, you'll close your tax accounts with your state department of revenue or taxation (or similar department or agency). You might also need to close tax accounts with your city or county governments.

Most states allow you to file your final tax returns and make your final payments online through a tax portal. Otherwise, you'll usually need to file your final returns by mail and pay any outstanding taxes. Depending on your business activities, you might've applied for multiple tax accounts, such as sales and use tax or withholding tax accounts.

Income tax account. Many businesses register with their state tax department to pay income tax. For instance, you might register for an online tax account to pay corporate income tax or a pass-through entity tax. In general, you simply need to file a final return with your state and the IRS. Make sure all taxes are paid and indicate that these returns are your business's final returns.