Before you notify anyone of anything, make sure that you have planned to pay your final payroll tax deposits and other outstanding debts to the government.

You’ll still need to file your final employment tax paperwork on time or the IRS can hold you personally responsible. It’s very important to plan ahead to have the cash on hand to pay outstanding debts, especially taxes, even if you plan on declaring bankruptcy.

 Federal and state employment tax authorities need to know you’re going out of business. Use the federal unemployment tax return (IRS Form 940) and the employer’s federal tax return (IRS Form 941) to inform them.

Each of these forms has a box to check that tells them they will not be filing future returns. Your state withholding forms should have similar check-off boxes.

If you are unable to pay your payroll taxes, the IRS can hold you and your business associates personally liable, even if your business operated as a corporation.  Filing bankruptcy does not eliminate debts to the government.

If you anticipate having trouble paying your taxes, you should call the IRS as soon as possible and either negotiate a payment plan, or ask them to accept a settlement based on what you are able to pay. If you are unable to get them to accept either of these plans, it’s wise to hire a tax attorney for their negotiation skills.

During tax season, you will need to file a final tax return for your income taxes on both the state and federal levels. The federal return has a box you can check indicating that it’s your final return.

Be prepared to file final forms for sales taxes as well, submitting them to the state office on your final day of operation. You can fill them out when you close for operation and put them away for tax season.

If you have employees, you should plan to give them their last paycheck on their last day. In most states, the law requires this. Make sure that you have made proper arrangements for vacation, sick leave, health insurance other payouts that are required by your state laws.

* To do: Be prepared to pay your payroll taxes. Set up tax forms 940 and 941 to correspond to your employees’ last day and check off the box as “last return.” Be aware of the benefits you need to pay out according to your state laws. Make arrangements to pay all debts you owe to the government.