Closing a store is the mirror image of opening one — and it has its own order of operations. Do it out of sequence and you can trigger WARN penalties, leave payroll tax exposed to the Trust Fund Recovery Penalty, or forget customer refunds that become unclaimed-property liabilities. This checklist keeps the steps in the right order.
Phase 1 — Decision & legal clock (weeks 1–8)
| Step | Why it matters |
|---|---|
| Confirm the reason (sale, can’t continue, bankruptcy) | The path changes the order — a sale needs a broker; insolvency needs an attorney first. |
| Check WARN / mini-WARN notice duty | Federal WARN: 60 days' notice if 100+ FT employees and a closing of 50+ or mass layoff of 500+ (or 33% and ≥50). 15+ states have lower thresholds. |
| Review the lease for a personal guarantee & cure clauses | A PG means the landlord can pursue you personally for remaining rent even after the entity closes. |
| Map all debts and who is personally on the hook | Loans, leases, and some vendor terms often carry PG. This decides "orderly close" vs "bankruptcy." |
Phase 2 — People (notice period)
- Issue any legally required WARN notice in writing to employees and the state dislocated-worker unit.
- Plan the final pay period, accrued PTO payout, and severance (if any). Several states require final wages within a set number of days of separation.
- Decide on outplacement or reference support — cheap goodwill that reduces dispute risk.
Phase 3 — Customers & creditors (parallel)
- Honor or refund outstanding gift cards and deposits. Unclaimed balances fall under state escheat (unclaimed-property) law, and the rules vary by state.
- Notify regular vendors and cancel standing orders to stop new liabilities from accruing.
- Publish a clear closure announcement with a last-date and a refund path.
Phase 4 — Assets & site
- Decide sale-as-a-going-concern vs asset liquidation. A going-concern sale usually recovers far more than auctioning equipment.
- Remove signage, return keys, and document the space condition for the lease deposit return.
- Cancel utilities, alarms, and licenses on the last day to avoid trailing charges.
Phase 5 — Tax & final filings
| Form | Purpose |
|---|---|
| Form 941 (or 944) | Final quarterly payroll tax — check the "final return" box. |
| Form 940 | Final federal unemployment tax — check box "d". |
| W-2 + W-3 | Final wages to employees and SSA. |
| Form 1099-NEC | Contractors paid ≥ $600 in the final year. |
| Form 966 | Corporate dissolution notice (within 30 days). |
| Form 1120 / 1120-S / 1065 | Final entity return, marked "final" (and final K-1). |
Phase 6 — Close the books
- Send the IRS a letter to close the EIN account after the final returns are filed.
- Keep employment-tax records for 4 years and other records per state rules.
- Keep a copy of the full closeout file — disputes surface months later.
Run the two interactive checklists (closing readiness + final tax) so nothing slips. For a distressed closeout where debts exceed assets, read our bankruptcy-vs-closing guide first.
Sources: U.S. Department of Labor (WARN Act), IRS (closing a business, Publication 15 / 334 / 542), and state unclaimed-property offices. Figures and thresholds retrieved 2026-08-13. State rules vary — confirm with a licensed professional.