A business can cease for many reasons including sale, retirement of owners, mergers and liquidations. It would be nice to be able to just walk away but unfortunately it is not that simple. There can be many pitfalls involved and if the process is not executed correctly then the business and possibly associated liabilities can come back to haunt.
As a rule of thumb, before a business can be wound up any creditors must be settled and all tax returns must be filed up to date and associated payments made. Typically there can be tax implications arising on the disposal of business assets (depreciation recovered liable for income tax) and GST to account for on the sale of those assets (if the business is not sold as a going concern). Even if some assets are retained rather than sold as part of the business sale these will also attract income tax and GST charges.
Companies have another layer of complexity when winding up as resolutions must be signed and formal deregistration with the Companies Office sought. Distribution of remaining assets, capital gains and retained earnings to shareholders must be worked through and the correct tax treatment applied to those distributions.
Please contact us should you be ceasing a business and we will be pleased to assist you with the process.