The Steps to Closing a Business in Canada
A Closing a Business Checklist
There are more steps to closing a business than just letting your customers and clients know when your closing date is and liquidating your remaining stock. When you’re 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.
Checklist of Steps
First, a checklist for you. What do you need to do when you’re closing a business?
1a. Cancel your business registration for your sole proprietorship or partnership OR
1b. Voluntarily dissolve your corporation.
2. File the 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, Quebec, British Columbia and Alberta.
1a. Canceling Your Business 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 enterprises. To close a general or limited partnership, you need to send the Registraire des enterprises a Dissolution and Liquidation form.
In British Columbia, you can cancel your business registration through the Business Development Centre website.
In Alberta, you can cancel a business registration via an authorized registry agent.
1b. Dissolving the Corporation
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 enterprises 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.
In British Columbia, you must file an Application for (Voluntary) Dissolution to dissolve a company under section 316 of the Business Corporations Act. The application can be filed on the provincial Corporate Online website. The company must be up to date with annual report filings.
2. File Your Last Tax Return
If you have dissolved a corporation, you will want to send the Canada Revenue Agency a copy of the Articles of Dissolution when you file the final return for the corporation. (Otherwise, the CRA will assume the corporation still exists and you will have to continue to file an annual tax return for the corporation forever, even if there’s no tax payable.)
3. Wind Up Your Payroll Accounts
You will, of course, also want to wind up your payroll accounts when you’re closing your business. You need to send all CPP contributions, EI premiums, and income tax deductions to your tax center within seven days of the day your business ends (CRA).
You also need to complete the necessary T4 slips and T4 Summary and send them to the Ottawa Technology Centre within 30 days of the day your business ends.
The CRA recommends that you also complete Form RC145, Request to close business number accounts (BN), and send it along with your final return.
4. Close Your GST/HST Account
Your GST/HST account will also need to be closed when you’re closing your business. Once you’ve filed all your outstanding GST/HST returns and paid any outstanding amounts, send Form RC145, Request to close business number accounts (BN), to the CRA.
In Quebec, Revenu Quebec deals with both GST and QST (Quebec Sales Tax). See more information about canceling these accounts under point 5 below.
To close your RST, PST or QST account, you need to file the appropriate paperwork with the relevant provincial ministry. (The Provincial Sales Tax section of my website has links to these.)
In Quebec, to close your registration for GST and/or QST, you need to send Form FP-611-V (Request for Cancellation or Variation of Registration) to Revenu Quebec. As a general rule, you must request cancellation of both your GST and QST accounts to come into effect on the same date.
In British Columbia, you can close your PST account by completing an online form from your eTaxBC account.
In Saskatchewan, you need to file a final PST return within 15 days of closing the business, return your Vendor's license, and obtain confirmation that all remaining taxes have been paid.
Be aware though that there are some small suppliers who cannot cancel their registration voluntarily, such as taxi drivers and non-resident performers. For more information, see General Information Concerning the QST and the GST/HST.
6. Cancel Any Municipal Business Licenses
If you have obtained a business license to operate in a town or city, be sure to notify the municipality that your business has closed and your license can be canceled.
There now. You’ve worked through the whole list and successfully filed all the paperwork you need to file when you’re closing your business. If you’re closing a business in some province other than those listed above, you’ll find that the basic procedure is the same; it’s just a matter of finding, filling out and filing the right form with the right agency.
For more information on issues related to selling or closing your business or succession planning, see: