Closing Your NC Tax Accounts With Form NC-BN

This page is general information for owners. It is not tax or legal advice. Forms and procedures change, so confirm the current steps with the NC Department of Revenue and your CPA.

Your Accounts Belong to Your Company

When your company registered with the North Carolina Department of Revenue, it opened accounts for the taxes it collects or withholds. For most operating companies that means sales and use tax and withholding tax.

Those accounts belong to your legal entity. In an asset sale, the buyer forms its own company and registers its own accounts. Yours don't transfer, and they don't close on their own.

An open account keeps a filing schedule. If returns stop arriving, the state's systems treat them as missing.

What Form NC-BN Does

Form NC-BN is the Department of Revenue's Out of Business Notification. It tells the Department that your business has stopped operating, and the date it stopped.

For a seller, that date is normally the closing date in your purchase agreement, the last day your company ran the business.

The form itself says to send it on its own and not attach it to a tax return. There is no fee to file it.

Guides on closing a North Carolina business warn that skipping it can leave the Department expecting returns, with penalties for ones that never come, even after the company is dissolved.

Final Returns Still Come Due

Filing NC-BN stops future returns. It does not replace the last ones. Your company still owes a final return for each account, covering activity up to the closing date.

• Sales and use tax: every taxable sale your company made before closing
• Withholding: the final period's return for tax withheld from paychecks your company issued, filed on your usual schedule
• Year end withholding reconciliation: the annual NC-3, along with W-2s for everyone your company paid that year

Your CPA or payroll provider usually handles these. Tell them the closing date as soon as it is set so the final period lines up with the sale.

Where This Fits Around Closing Day

Before closing, the buyer's attorney will want to see that your sales tax is paid, because North Carolina can hold a buyer liable for a seller's unpaid sales tax.

That step is covered in North Carolina sales tax when selling a business.

After closing, the order is simple. File the final returns, pay what is due, then send NC-BN. Doing it in that order keeps the account from closing with a balance still open on it.

If the closing date slips, hold the form. Filing it before the business actually changes hands creates its own confusion.

Who Signs and Files It

The form comes from your company, not the buyer. An owner or officer signs it, though in practice your CPA or bookkeeper often fills it in and sends it once the final returns are done.

The Department accepts it by mail, and guides on closing a North Carolina business say it can also be handled online. Either way, keep a copy with the date you sent it.

That copy matters later. If a notice arrives months after the sale asking about a missing return, the dated NC-BN and your final returns are what settle it quickly.

Dissolving the Company Is a Separate Filing

Many sellers keep the old company open for a while after an asset sale. It may be collecting a seller note, waiting on an escrow release or paying final bills.

When you are ready to end it, the North Carolina Secretary of State takes Articles of Dissolution. For an LLC that is Form L-07, with a $30 fee, according to the Secretary of State's office.

The Secretary of State won't accept a dissolution from a company with delinquent fees, so file any missing annual reports first.

Dissolving with the Secretary of State does not notify the Department of Revenue. The NC-BN and final returns are still yours to file. Your CPA may also need to file the company's final income or franchise tax return.

Other Accounts to Close

The Department of Revenue isn't the only agency with an account in your company's name. Most sellers also deal with these:

• The unemployment insurance account with the Division of Employment Security, covered in our NC unemployment account transfer guide
• The county's business personal property listing, covered in Mecklenburg County business personal property when you sell
• Local permits and any industry licenses held by your company

If You Sold Stock Instead

In a stock or membership interest sale, the buyer purchases the company itself. It keeps operating, keeps its accounts and keeps filing under its new owners. There is nothing for you to close.

What changes is risk. The buyer now owns a company with your tax history inside it, so the purchase agreement will say who pays taxes for periods before closing. Expect a holdback or escrow to back that promise.

Larger companies sold to private equity often go this way. See selling to private equity for how those deals are usually built.

A Short Checklist

1. Before you list: file every open return and clear any balance with the Department of Revenue.
2. Before closing: have your sales tax status ready for the buyer's attorney.
3. After closing: file final sales tax and withholding returns and pay what is due.
4. After closing: send Form NC-BN with the closing date as the date closed.
5. At year end: file the NC-3 and issue W-2s.
6. When the company winds down: file Articles of Dissolution with the Secretary of State.

Clean books and current filings make a company easier to buy and faster to close. To see what yours could sell for, request a free, confidential valuation or call (704) 555-0187.