There is so much interest in knowing how to start a business and how to register it with the proper government agencies.
On the other hand, very few start-ups would ask questions on procedures for getting out of business. There are so many entrepreneurs with the mistaken notion that all they have to do when the business has stopped being profitable or when owners have lost interest in continuing it, is to stop operations, post a “business is closed” sign and that’s it.
Thus, many are caught by surprise when the BIR, for example, would get in touch and and demand back taxes. Or when the Department of Labor would summon the entrepreneur for unpaid obligations to employees.
Many are even more surprised when they learn that it is even more tedious and painstaking to apply for business closure than to apply for business registration.
Businesses can be closed voluntarily or involuntarily. Voluntary closure generally means the business owner close the business in his or her own will, usually complying with applicable business regulations. On the other hand, involuntary closure means the business is closed due to events, such as failure to comply with the law or regulations and the government or court has ordered to close the business. In this article, we assume that the business owner is voluntarily closing the business
Whatever the reasons for closing a business, the prescribed legal procedures must be followed.
The process of business termination depends on the type of the company to be ceased.
Corporations and partnerships should formally close in the Securities and Exchange Commission (SEC) where they are also registered, unlike sole proprietorship businesses that are not. There are also businesses that should comply with the closure requirements of other government agencies, where they are specially regulated. For example, pawnshops are also required to be closed in Bangko Sentral ng Pilipinas (BSP), where they are also governed or regulated.
A rule of thumb is: Close your business with all government offices you opened (registered) it with.
Usually a business should be closed in the following government agencies/offices.
• Department of Trade and Industry (DTI) office
• The local City/Municipal Office, where the business is registered
• Department of Labor and Employment (DOLE) office, if the company has employees
• Bureau of Internal Revenue (BIR) office
• Bangko Sentral ng Pilipinas (BSP), if the business is registered with the office
• Securities and Exchange Commission (SEC) for partnership and corporation
• Other agencies or offices where the business is registered, such as SSS, PHIC and HDMF
For more particulars on procedures for applying for business closure in these various agencies, visit businesstips.ph.
Photo: From www.ecommerce-blog.org