How to shut down a startup: the full checklist

To shut down a startup, the board and stockholders approve the decision, the company tells employees and investors, pays or settles what it owes, sells or distributes what it owns, files final tax returns, dissolves with its state, and keeps required records. Cancel software accounts last, after you have exported what you must keep. The checklist below puts each task in order with a rough owner.

Before you announce anything

• Confirm the numbers. Cash, runway, debts by creditor and any personal guarantees. If liabilities exceed what you can pay, talk to a lawyer about insolvency options before you take other steps.
• Read your documents: charter, bylaws or operating agreement, investor rights agreements, loan agreements and SAFE or note terms. They set the approvals you need and who gets paid in what order.
• Talk to investors early. Some may help find an acqui-hire or asset buyer.

The wind-down checklist

Area	Task	Owner	When
Governance	Board resolution and stockholder or member approval to dissolve	CEO, counsel	First
Governance	Plan of dissolution: who winds up, how assets are distributed	Counsel	First
People	Check WARN: federal applies at 100+ full-time employees and needs 60 days’ notice; some states differ	HR, counsel	Before announcing layoffs
People	Final pay on your state’s schedule, benefits end dates, COBRA notices	HR, payroll	Last day of work
Customers	Notice of service end, refunds, data return or deletion per contracts	CEO, ops	Weeks before shutdown
Assets	Sell or license IP, equipment, domain names, and decide on records	CEO, counsel	During wind-down
Debts	Pay or negotiate with creditors; collect receivables	Finance	During wind-down
Tax	Form 966 if a corporation adopts a plan to dissolve or liquidate	Accountant	After the resolution
Tax	Final income tax return with the “final return” box checked	Accountant	Next filing deadline
Tax	Final Form 941 (closing box and date of final wages), Form 940 (box d), W-2s	Payroll	Quarter of final wages
State	Certificate or articles of dissolution; withdraw foreign qualifications; close sales tax and payroll accounts	Counsel	After debts are handled
Records	Export email, chat, drives, finance and HR records; set retention	Ops, IT	Before cancelling any account
Accounts	Cancel SaaS, cloud, domains, bank accounts in that order	Ops	Last

Records you must keep

The IRS says to keep most tax records for three years, employment tax records for at least four, and records for a bad debt or worthless securities claim for seven. Form I-9s must be kept for three years after hire or one year after employment ends, whichever is later. Keep the records somewhere that will outlive the company’s accounts: an export on owned storage, not the SaaS tool you are about to cancel. The SBA’s guide puts record keeping at three to seven years.

The order of the last steps matters

Cloud vendors delete data on their own clocks once you stop paying:

• Google Workspace: Google says users’ data is deleted after cancellation and can’t be restored. Its Data Export tool needs an active subscription for Gmail, Drive and Chat data.
• Microsoft 365: most business subscriptions stay “Expired” for 30 days with normal access, then “Disabled” for 90 days with admin-only access, then data is deleted.

So export and verify first, then cancel. Our guide to company email, Slack and files when you close walks through each system.

Assets people forget

A startup’s assets are more than cash and laptops. Code, trademarks, domain names, customer contracts and years of business records can all be sold or licensed. Some AI developers license de-identified copies of email, chat, documents and tickets, including from companies that have closed, as long as the records still exist. If the company is selling assets to pay creditors, raise this with your counsel early.

Dissolving with the state

The filing is the last legal step. In Delaware, taxes keep accruing until a Certificate of Dissolution is filed, and failing to close formally leads to penalties and interest. See how to dissolve an LLC or corporation.