Forums: Discussions for entrepreneurs and small business.

How do I close my business with the IRS? It`s obvious that I`m not going to make a profit enough to bother with federal taxes and want to close my business and just enjoy it as a hobby.

I will only speak from my own experience in shutting down small businesses that was simply reported on Schedule C.  I dutifully filed my Sched C if there was ANY income from the business.  After that last one, and there was no more income from the business, I just stopped filing the sched C.  I`ve done this twice and the IRS or State never asked any questions.





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Steve Mann
Internet Videographer
MannMade Digital Video
My Email

I agree with Steve, if the business is a single member LLC or a sole proprietorship.  If you are a partnership,, Sub-S Corp or C Corp, then you should file a final return for the entity.  If you have a tax ID number that is not your social security number, then its best to give the business its proper "Out of Business" sign with the proper authorities in the IRS and local and state licenses which you may have.

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I`ve not been ignoring you all, just tied up with the new CPSIA law and the impact it will have on my business/hobby...lol

I now realize that I have been misled until now about the difference. Definitely don`t want the hassle of an audit, so will just continue to file and cut back on the available deductions. Otherwise, I`ll be showing a loss again this year.

Misled by one of us?  It`s really simple - if it generates income, it`s a business.  If not, it`s a hobby.  The problems with the IRS occur when someone tries to make a little money with their hobby in order to deduct their hobby expenses as business expenses.  In case of an audit (been there, done that) you have to convince the examiner that you really are in business to make money.


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Steve Mann
Internet Videographer
MannMade Digital Video
My Email

No, not misled by anyone here at all! My misinterpretation of what is taxed and not taxed.

You do not have to have a profit in order for your ventures to be considered a business by the IRS.  You must operate your business with the INTENT of making a profit and you must do whatever you can to try and make a profit.

You may be interested in these articles I wrote on the subject:
Business or Hobby:  http://glgcpa.com/blog/2006/08/15/business-or-hobby/
Hobby Income Unfair:  http://glgcpa.com/blog/2007/02/10/118/



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Gina L. Gwozdz, CPA
http://GLGcpa.com
http://TaxTreasures.com