So, How Do You Close Your Business in Quebec?

The closure of a business: administrative procedures and consequences

Closing a business is not a pleasant or manageable time. Whether financial, professional or personal reasons, this decision has many consequences on several levels. It is essential to follow administrative procedures to inform the relevant institutions of the cessation of your activities.

What are the cases in which a company is closed?

In order to regularize your situation officially, it is necessary to inform the authorities of the closure of your business and the reason for this decision. Indeed, the procedures differ depending on whether it is a cessation of activity, a dissolution, a bankruptcy or a liquidation.

You must first declare the closure of your company to the Business Registry where it was previously registered. This register distinguishes between the different cases mentioned above. In order to inform the Registry more precisely about the conditions of closure and to finalize your collaboration by paying the necessary final costs, here are the administrative formalities to be completed.

In the event of cessation of activity

If your business decides to cease operations, you must immediately request that the GST and QST be deregistered. In addition, you must cancel any other commodity taxes for which you are enrolled. In the event of non-compliance or oversight, your company may have to pay charges when it no longer generates income from activity.

Depending on the sector of activity, your company in cessation of activity must also inform the competent authorities by using an update form or simply by writing a letter containing the new information.

In the event of a dissolution

To be adopted, the dissolution must be approved by at least two-thirds of the shareholders or by a decision of the directors (e.g. by agreement of the board of directors) or the sole shareholder of the company. Then, the application must be submitted to the Registry of Companies by filling in the Declaration of Intent to Dissolve and Application to Dissolve form.

In the event of a wind-up

This particular case requires the production of a notice of liquidation and closure of liquidation. These administrative documents are used to justify the procedures you are undertaking to fulfill your final obligations and liquidate your assets. The notice of liquidation can be sent directly online via a service offered by the ARC agency. It is strongly recommended to ensure that the company in liquidation is still registered with the business register at the time of this declaration. The liquidation of a company involves other obligations than the simple sale of a company.

In the event of bankruptcy

This case is quite complex and will be treated differently depending on whether it is a legal entity or a sole proprietorship. Indeed, in the case of a sole proprietorship, there is no distinction between personal and professional assets. Thus, the bankruptcy of a sole proprietorship automatically leads to personal bankruptcy.

It is strongly recommended that you use the services of accountants to assist you in the closure of your bankrupt business.

In addition to informing the official contact persons of the bankruptcy of your company, it is also important to inform your business partners such as customers, employees and suppliers.

Don't forget about the other usual formalities such as changes in situation with the banks. This will make it easier to cease your activities and avoid unpleasant financial surprises.

What are the impacts of the closure of a business on taxes?

As a Canadian business, you must pay taxes and duties based on your activity, both to your province and to the Canada Your tax obligations to these institutions end as soon as you close your business. To ensure this, you must inform them properly.

Regarding taxes, you must close your accounts with the tax authorities. Canada and Revenu Québec once you have regularized your situation with these two organizations (that is, your last notices of assessment have been processed and you have no outstanding debts).

To do this, you will need to fill out separate forms to close your tax credentials with each institution. However, be careful not to fill out these business closure forms if your company has been or is going to be merged, as this is a different situation from a real cessation of activity.

The formalities for closing a business with Revenu Québec may vary depending on the reasons for ceasing activity. Find out more on the Internet or call on a qualified tax professional to assist you.

As far as taxes are concerned, during the course of your business, you paid taxes to the state. Therefore, it is important to stop payments now that your business is closed. As mentioned above, you must unsubscribe from the GST and QST files, as well as any other taxes to which you were subject during the course of your activity.

Once again, depending on the particular circumstances and the nature and scope of your business, it is advisable to contact Revenu Québec or call on a tax expert.

How to find an accountant to support you in the closing process?

Because of the rigor and organization required to carry out the process properly, we recommend that you call on a quality accountant to help you.

So don't hesitate to contact us if you want to find an accountant adapted to your reality as an entrepreneur to accompany you in this process. https://www.bankeo.ca/