The business can distribute any cash or assets that are left over to the owners on a pro-rata basis in proportion to their equity interest in the business. Usually, you can take the assets and either use them directly to pay creditors and eliminate the liabilities of the business or sell them to raise cash to repay those liabilities. If the amount of assets exceeds the value of the liabilities, then wrapping up the business is relatively simple. When the owners of a business choose to stop operating the business, they're typically left with assets and liabilities. Let's take a look at the typical process of liquidating a business to see how you can zero out your balance sheet by the time you're done. You'll usually find a box to check on your business tax return to indicate that it's a final return, but you'll also be able to show that your business has wrapped up successfully by preparing a balance sheet that has zero balances for all the accounts of the business. In order to avoid complications, you need to file appropriate final tax returns for the business to let state and federal authorities know that you've decided not to continue the business any longer. Wrapping up a business requires more than just putting a closed sign on the window.
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