How to Dissolve an S Corp For a Single Owner

For a single-owner S corp, revoking an S corp election or dissolving the business is fairly straight forward. Here are the steps required on how to dissolve an S corp for a single owner:

How to Dissolve an S Corp for a Single Owner

Shareholder Approval and Documentation – Since the only shareholder is yourself, this step is more of a formality to ensure you have met the IRS requirement. Hold a board of directors meeting, vote and approve the dissolution of the business, document in the meeting minutes, and sign-off as the sole owner. You can find a Board of Directors’ meeting minutes template at the following link – Click Here.
Pay Remaining Liabilities and Distribute Assets – Pay any remaining balances due to vendors and distribute business assets (such as the amount in your checking account) to your personal bank account.
Inform the IRS by Filing Form 966 – Form 966 should be filed within 30 days of shareholder approval. This form alerts the IRS of the S corp dissolution. You can find an example of a completed Form 966 at the following link – Click Here.
File Final S Corp Tax Return and Final K-1 – File the final year’s Form 1120-S tax return and K-1. It’s crucial that the “final” box is checked on the 1120-S tax return and K-1. This indicates to the IRS that they should not be expecting any future S corp tax returns. This should be done on the state returns as well.

Notify Payroll Processor – Notify your payroll processor to let them know you are dissolving your S corp and won’t be needing future payroll for the business. The payroll processor will file the necessary final payroll tax returns and W-2s.
File State Legal Documents – If you are ending your business, work with your attorney or registered agent to file the necessary legal paperwork with your state’s secretary of state. If you need a referral to an attorney, we are happy to provide a couple of options – Click Here.

I hope this breakdown helps clarify the necessary steps required for how to dissolve an S corp for a single owner. Overall, it’s a fairly simple process. I recommend working with a CPA and attorney to get this resolved in the appropriate manner.

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About the Author

Brett Rosenstein

Founder of S Corp Advantages
Certified Public Accountant

Brett is the founder and president of S Corp Advantages where he specializes in S corporations. He helps business owners understand if an S corporation election is right for their business. He also keeps current S corps in compliance with IRS regulations.

Brett received a Bachelor of Science in Business Administration from The Ohio State University. He is also a Certified Public Accountant.

When Brett is not working, he is running, biking, spending time with his wife and daughter, or trying new pizza places around Chicago.

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