I have a semi-successful business doing A/V stuff. I am a sole proprietor, no LLC or anything like that. It’s just me, no employees, no payroll. I still do gigs on a limited basis. I do not look for new work but I still gladly help existing clients to the extent that I can.
I intend to slowly wind things down. At some point I need to cease to be a business for tax reasons. I have no idea of how to do that and minimize my tax bite. I’m assuming there is a process?
Do you have any capitalized assets or ongoing expenses like liability insurance? If not, there is probably nothing to wind down. You just cease to earn any self employment income. There is no business entity aside from yourself.
We will probably need more information, such as where you live, what “tax bite” you are concerned about (e.g., disposing of depreciated assets?), etc.
I shut down my newsletter business last year, but it had been losing money for the previous year or two, there were no physical assets, so I just filed my tax return as usual, canceled my Costant Contact account, and that was pretty much it. Probably not much help to you.
My wife was a free-lance translator. She just stopped accepting jobs. She did sell her computer to someone for $25 so she could take the last of the depreciation on her last business return.
I’m semi-aware of how depreciation works. Since I have not made any major equipment purchase in years I probably don’t have much capital to depreciate
I’ve been using 8829 “use of home”. I assume IRS “recaptures” use of home deductions?
Also concerned how my actions might affect drawing on SS or Medicare. I have not applied for either yet.
Restating the question: Does one pick a quit date and BAM from then on the biz ceases to exist? Or is there a practical way to ‘ease’ the biz out of existence?
Probably a stupid question and I think I know the answers. But I’ll hang up and listen to your reply.
This reply was unsaved when I lost connectivity back in July & I just noticed it sitting in my “Drafts” section. So FWIW, here it is:
This one is pretty simple. When you sell the house, those 8829 deductions are added back in such that they represent an increase in the profit you made selling the house.