Declaring bankruptcy is not the only way to shut down your business.
Learn more about closing down a business in Canada in this video.
If you prefer reading, you can find transcription below the video.
closing down a business
Good afternoon, everyone. It’s Irfanali with RMI Professional Corporation. I hope everyone’s had a great week. So today, I wanted to touch on a different topic and that is closing down a business.
I talked to some clients who’ve come in and asked me saying, “I’m switching companies, I wanna close my old one down.” or “You know what? I’m just retiring. I need to close down my company. What’s the process?”
you don't have to file bankruptcy
With a lot of people, the misconception is that you have to file your company
bankrupt. Well, that’s not always the case.
In reality, the first step to take is to dissolve your corporation with the registry. At that point, the company is now deemed to be closed.
If you have existing liabilities, then that’s something that you need to sit down on and analyze. Are those liabilities going to transfer to you personally or not?
And in some cases, if you have creditors who are chasing you, that’s when you need to actually take it a step further and file bankruptcy.
current Assets and liabilities
The big thing to really pay attention to when you’re closing down a company is what’s left inside the company.
How are we gonna dispose of it? What do we need to do? Is there cash that needs to be removed? If that’s the case, are there any tax complications around that?
Are there any liabilities that need to be paid? If they’re gonna be paid by you personally, there could be some tax advantages for you on the personal side. So, that’s something else to consider.
dealing with creditors?
Another big piece is, if you have creditors who are chasing you, are they gonna pursue things beyond? In that case, we’d have to take it a step further and actually bankrupt the company.
I hope this gives you some insight if you need to close down a corporation, the steps you need to take, and the things to be aware of.
Talk to experienced tax accountants in calgary
As always, if you have any questions, feel free to reach out to our office. Once again, it’s Irfanali with RMI Professional Corporation. Have a great week.