Jeremy Tauri: How to close down your business

Jeremy Tauri

Closing down a business entity is something we get asked about every now and then for various reasons. It might be because the business has sold, or it's harder or more expensive than first thought, or another opportunity has come about - whatever the reason there's a few things you need to do to make sure it ends smoothly.

Always make sure you get some advice on your particular situation as you may need some extra help - especially if it's looking like you may be short on paying the bills or you're a company or trust as there may be some specific tax issues you'd need to consider. But here are some general things when it comes to compliance paperwork.

Make sure you have all your returns filed. GST returns and tax returns should be filed before you close down your business - especially so if you are a sole trader or partnership. IRD may give you default assessments if you don't, which you'll still need to pay. You may even need to do a part year set of accounts to the date you close your business.

For assets you have that you haven't sold and are going to keep you'll need to get valuations. Once your business closes they're deemed sold if you keep them and you'll need to pay GST on them in your final GST return and possibly tax.

Make sure you cease tax types you're not needing, so close down the GST and FBT tax types and others that don't apply. This will stop the reminders to file and potential default assessments.

Let suppliers know you're closing shop and close accounts with them to ensure no one can tick stuff up at your expense.

Depending on your business type and risk you may need to hold some insurance for a period of time after you close - check this out with your specialists. For companies and trust things are different, so get advice.

Jeremy Tauri is an associate at Plus Chartered Accountants.