Massachusetts Business Attorney · Business Law
When a business closes, owners focus on customers, inventory and creditors. The steps that most often create personal exposure afterward are quieter: payroll, unemployment insurance and tax accounts.
Final pay is due on the last day
Under the Massachusetts Wage Act, an employee who is let go must be paid all earned wages on their final day. That includes accrued, unused vacation pay. Late final pay can bring mandatory triple damages plus attorney’s fees. Company officers and managers can be held personally liable.
Employee notices and benefits
- Unemployment: Give departing employees the required information about filing for unemployment within 30 days of their last day of work. File your final quarterly reports with the Department of Unemployment Assistance, then close the account.
- Paid Family and Medical Leave: File and pay final PFML contributions.
- Health insurance: Tell employees about continuation coverage. That’s federal COBRA for employers with 20 or more employees, or Massachusetts continuation coverage for employers with 2 to 19 employees.
- Large layoffs: Employers with 100 or more employees may owe 60 days’ advance notice of a plant closing or mass layoff affecting 50 or more workers at a site, under the federal WARN Act.
Close every tax account, not just the business
- File final returns with the Massachusetts DOR and close withholding, sales and meals tax registrations in MassTaxConnect.
- Mark federal returns as “final” (see the IRS closing a business checklist). A corporation generally files IRS Form 966 within 30 days of adopting a plan to dissolve.
- Issue final W-2s and 1099s.
Open state tax accounts keep generating filing obligations, and penalties when they’re missed. Officers can be held personally responsible for unpaid withholding and sales tax.
The tax information above is general information, not tax advice. Talk with an accountant or tax advisor before closing your business’s tax accounts.
Then the paperwork tail
Cancel licenses and permits, end or assign leases, and keep payroll and tax records for the required retention periods.
This post builds on our checklist for closing a Massachusetts business, which covers receivables, inventory and creditors. For the formal legal steps, see how to wind up a Massachusetts business. If you’re planning a closure, contact our office early, before the last payroll is run.
About the Author
Richard Alan Gaudet, Esq. is a Massachusetts attorney at the Law Offices of Richard Alan Gaudet, LLC in Middleton, Massachusetts, who advises clients on business closures, employment law and the Massachusetts Wage Act. His practice focuses on professional license defense, business law and litigation, family law, and landlord representation, serving clients across Northern, Eastern, and Central Massachusetts. Reach him at 978-273-8337 or rgaudet@gaudetlawoffice.com. Office: 35 Village Rd., Ste 100, Middleton, MA 01949.
ABOUT THIS ARTICLE
This article was prepared by a Massachusetts attorney and is provided solely for general informational and educational purposes directed to members of the general public. It does not constitute legal advice and does not create an attorney-client relationship. The law applicable to any particular situation depends on the specific facts and circumstances of that matter. Readers are encouraged to seek the advice of a licensed Massachusetts attorney before taking any action.
