There's more to closing a business than just letting your customers and clients know when your closing date is and liquidating your remaining stock. When youre closing a business, you also need to cancel your business name or dissolve your corporation and close the relevant Canada Revenue Agency and provincial tax accounts. Otherwise, with no evidence to the contrary, your business officially continues, and you end up having to continue to file various tax returns.
The good news? Closing a business isn't difficult. It's just a matter of filling out and filing the right forms and being sure you file all the forms you need.
First, a checklist for you. What do you need to do when youre closing a business?
1a. Cancel your business registration for your sole proprietorship or partnership OR
1b. Voluntarily dissolve your corporation.
2. File a last tax return if you have dissolved a corporation.
3. Close your payroll accounts with the Canada Revenue Agency (CRA).
4. Close your GST/HST accounts with the CRA.
5. Close your RST/PST/QST accounts with the appropriate provincial agency.
The rest of this article outlines the procedures for each of these steps for closing a business, with a detailed look at the procedures for closing a business in Ontario and Quebec.
1a. To close your business, you need to cancel your business registration if you operate a sole proprietorship or partnership. The catch is that this is called different things in different provinces.
In Ontario, you can use the Change of Business Information on the Service Ontario website to cancel your business name registration.
In Quebec, it's called Striking Off an Enterprise, and to close a business you need to file a Declaration of Striking Off with the Registraire des entreprises. To close a general or limited partnership, you need to send the Registraire des entreprises a Dissolution and Liquidation form.
1b. If you are operating a corporation and want to close your business, you need to dissolve the corporation. The first step to closing your business is to pass a special resolution. According to the Business Corporations Act,
- A corporation may be dissolved upon the authorization of a special resolution passed at a meeting of the shareholders in accordance to S.237(a) or the consent in writing of all the shareholders entitled to vote at such meeting (S.237(b)).
- In the case where the corporation has not commenced business and has not issued any shares, the corporation may be dissolved upon the authorization of all its incorporators or their personal representatives at any time within two years after the date of incorporation (S.237(c)).
Then, in Ontario, to close your business, the appropriate Articles of Dissolution must be submitted to the Companies and Personal Property Security Branch, along with a Letter consenting to the dissolution from the Corporations Tax Branch, a covering letter and a $25 fee. (Note that this procedure applies only to voluntary dissolution of Ontario corporations; the procedure for involuntary dissolution of a corporation differs.)
In Quebec, the procedure for voluntary dissolution of a corporation is similar. To close your business, you need to send the Registraire des entreprises the Declaration of Intent/Application for Dissolution of a Company or Non-profit Legal Person form, a certified copy of the by-law or resolution authorizing submission of the application for dissolution, either the full page of the newspaper in which the intent to dissolve was published or a clipping along with the name, date and place of the publication, the annual declarations required by the Legal Publicity Act, and, if necessary, an application for revocation of striking off.
Continue on to the next page for details on steps two through five of closing a business.