How do I close my old corporation and start a new one?

December 4, 2019 1:40 PM

I've run a small business through a S-corporation for several years. I moved from one state to another and my new tax/paperwork obligations are difficult. I want to start a new corporation in my new state to make things easier. How do I pull this off?

My business is a single employee S-Corporation (ie I'm the president and only one on payroll, although we have a few 1099 contractors). I moved from California to another state in 2018, and our 2018 taxes/paperwork were awful - double tax from two high tax states and a huge PITA filling out paperwork for both states.

I'd like to start a new corporation in the state where I now reside/do work, apply for S Corp status election, move assets over to the new company, and sign new SOWs with my clients/open new bank accounts, get a new business credit card, etc. as necessary.

I'm going to speak with my accountant about this and (possibly) to a lawyer. My questions:
1) What should I specifically discuss with my accountant and/or lawyer so I make the best use of my time?
2) What should I look out for?
3) Besides presumably opening a new bank account for the new corporation and dealing with delays as clients switch over direct deposit, etc., what else should I anticipate for the transition?

posted by allthethings to Work & Money (3 answers total)

I closed my S Corp last year. For me, the only change on my federal taxes was to check the box "company closed/ended this year" on my federal corporate return. (After using an accountant for a number of years, I'd been using TurboTax for the last three years, so I just followed the directions.)

I don't know that I had to, but I called my state's Department of Commerce around December 1st and got a list of the documents I needed to complete to close the corporation from the state side. I filed state papers on December 30 and filed federal taxes as soon as our relevant documents arrived after the first of the year.

I suspect in your situation you could open the business in the new state now and just close the state side of your corporation on December 31. Then note the change of address with the feds.
posted by summerstorm at 1:51 PM on December 4, 2019

Consult with your insurance agent to see how to handle claims that might be made or filed after the change.
posted by yclipse at 6:32 PM on December 4, 2019

I moved from one state to another and my new tax/paperwork obligations are difficult. I want to start a new corporation in my new state to make things easier.

If you want to simplify your tax and paperwork obligations, consider the possibility of not forming a new S-corp at all. Just close your old S-corp.

You should use an S-corp in place of a sole proprietorship only if you have very good reasons for doing so. An S-corp is often an unnecessary complication.
posted by JackFlash at 11:09 AM on December 5, 2019 [1 favorite]