Shutting down a company: the checklist, in order.

1. Pick the path

   A solvent company dissolves and pays everyone. A company that cannot pay its debts usually chooses between an assignment for the benefit of creditors, where an assignee sells the assets, and a Chapter 7 bankruptcy. Choose before you tell anyone, because the path decides who signs everything after.

2. Board resolution

   In Delaware, dissolution starts with a resolution adopted by a majority of the whole board at a meeting called for that purpose.¹

3. Stockholder vote

   Dissolution then needs a majority of the outstanding stock entitled to vote.¹ Check the charter and investor agreements for preferred-stock consents on top of that.

4. Investor and lender documents

   Read SAFEs, convertible notes and loan agreements now. Notes can convert or come due on a dissolution, and a lender with a lien on all assets may need to consent before any asset is sold or licensed.

5. Wind-down plan and budget

   Write down who runs the wind-down, the cash it needs, and the date operations stop. Keep the board resolution and plan permanently.

1. WARN Act notice

   The federal WARN Act covers employers with 100 or more employees, not counting part-time staff. A plant closing is a shutdown that causes an employment loss for 50 or more employees at one site during any 30-day period.²

2. Serve the notice before the closing

   A covered employer cannot order the closing until a 60-day period after it serves written notice on the employees or their union, the state’s rapid-response unit and the chief elected local official.³ Several states have their own versions with lower thresholds or longer notice, so check each state where you have staff.

3. Final pay

   State law sets when the last paycheck is due, and in some states it is the last day of work. Accrued vacation may have to be paid out. Unpaid wages usually rank ahead of other unsecured debts, so budget them first.

4. COBRA

   Federal COBRA applies to employers that had at least 20 employees on more than 50 percent of typical business days in the prior year. The employer must notify the plan within 30 days of a termination. Coverage can end early once the employer ceases to maintain any group health plan.⁴ Tell staff the date the plan itself ends.

5. Retirement plan

   Decide whether to terminate the 401(k) and tell the provider. Participants need time to roll balances over.

6. Equipment and access

   Collect laptops and remove access, but suspend departed employees’ accounts rather than deleting them. Their mail and files are company records you may still need.

1. Customers

   Stop new sign-ups. Read each contract for the notice period, refunds of prepaid fees and what you owe on termination. Enterprise contracts often require longer notice than consumer terms.

2. Customer data

   Data processing agreements usually require you to return or delete customer data when the service ends. List those obligations by customer and do them on schedule.

3. Personal data

   If you hold personal data about EU or California residents, GDPR and CCPA duties to delete it, or to keep it secure while you hold it, continue through the wind-down. Document what you deleted and when.

4. Vendors and leases

   Give notice under each contract’s termination clause. Negotiate the office lease early; it is often the largest remaining liability.

5. Licenses, permits and insurance

   Cancel state and local business licenses, sales-tax permits and professional registrations after the last day of trading. Keep general liability and directors-and-officers cover until the wind-down ends; cancel workers’ compensation when the last employee leaves.

1. Form 966

   A corporation that adopts a resolution or plan to dissolve files Form 966 with the IRS. File it within 30 days after the resolution or plan is adopted.⁶

2. Final income tax return

   File a final return for the year you close and check the final-return box: Form 1120 for a C corporation, 1120-S for an S corporation, 1065 for a partnership.⁵

3. Final payroll returns

   File Form 941 or 944 for the quarter of the last wage payment, and Form 940 for that calendar year, marked final. Give each employee a W-2 and send the W-3 to the Social Security Administration.⁵

4. Asset sale

   If you sell the business or a group of its assets, the IRS requires Form 8594.⁵

5. Contractors and benefit plans

   Send final Forms 1099 to contractors and Form 1096 to the IRS. If you terminate a retirement or health plan that files Form 5500, file a final 5500 for it.

6. Close the EIN

   Write to the IRS with the legal name, EIN, address and reason for closing. It will not close the account until every return is filed and every tax paid.⁵

7. State accounts

   Close sales-tax, withholding and unemployment-insurance accounts in every state where you registered. Some states also require a tax clearance before they accept the dissolution filing.

1. Collect what you are owed

   Invoice and collect receivables before customers scatter. Chase deposits on leases and prepaid vendor contracts.

2. Sell or license the assets

   Equipment, domains, trademarks, code and the records archive are all assets. Start sales before you dissolve, while the people who know the assets are still around and the systems still run.

3. Pay claims before owners

   A dissolved Delaware corporation must pay or make reasonable provision for all claims and obligations, including known contingent ones. Only then are any remaining assets distributed to the stockholders.¹

4. Distribute in the order the documents set

   Preferred stock with a liquidation preference is paid before common. Follow the charter and the cap table, and get the board to approve the distribution.

5. If there is not enough

   When the money will not cover the debts, stop and get counsel. Directors and stockholders who pay owners ahead of creditors can face claims to return it, and an assignment for the benefit of creditors or bankruptcy may be the better path.

1. Certificate of dissolution

   File it with the state of incorporation once the votes are in and the taxes are current.

2. Withdraw from other states

   File a withdrawal in every state where the company registered to do business, or the annual fees and reports keep accruing.

3. Final accounts

   Close the bank account and company cards last, after the final payments and distributions clear. Cancel the registered agent after the state confirms dissolution.

4. Website and domain

   Post a closure notice with the effective date and a contact for claims. Keep the domain until mail stops arriving.

1. Delaware Code, Title 8, Chapter 1, Subchapter X, §§ 275, 278 and 281 (dissolution and winding up)
2. 29 U.S.C. § 2101, WARN Act definitions (Cornell Legal Information Institute)
3. 29 U.S.C. § 2102, WARN Act notice requirement (Cornell Legal Information Institute)
4. U.S. Department of Labor, “An Employer’s Guide to Group Health Continuation Coverage Under COBRA”
5. IRS, “Closing a business”
6. IRS, Form 966, Corporate Dissolution or Liquidation
7. IRS, “How long should I keep records?”
8. USCIS, Handbook for Employers M-274, “Retaining Form I-9”
9. MIT Technology Review, “AI labs are buying data from dead startups to train their models,” October 13, 2026
10. Slack Help Center, “Feature limitations on the free version of Slack”
11. Microsoft Learn, “Data retention, deletion, and destruction in Microsoft 365”
12. Google Workspace Admin Help, “Cancel Google Workspace”
13. U.S. Department of Labor, Wage and Hour Division, Fact Sheet #21, “Recordkeeping Requirements under the Fair Labor Standards Act”

General information, not legal or tax advice. State rules on dissolution, final pay and employee notice vary; this page uses Delaware and federal law as examples.