There is no doubt that times are tough and that no one could have predicted or prepared for what 2020 has brought. Businesses worldwide have felt the stinging effects of the economic downturn left in the wake of the Covid19 outbreak. Industry Canada outlines that small businesses account for nearly 98% of employer businesses in the country. Canadian independent business owners are the core of this economy, and when they are forced or decide to close their doors, the impacts are far-reaching.
Because of the importance of small, independent businesses in Canada, the Federal and Provincial governments have tried to prevent business closures and provide economic relief for those business owners who are having trouble paying wages, rent and other costs due to Covid-19. This government relief has come in the forms of wage subsidy, loan programs and other relief packages. Despite this government relief, many Canadian businesses were forced into closing permanently, and many of those businesses who survived will likely be feeling these effects for some time.
Adapting business plans, products and services, implementing socially distanced measures and maximizing the reach of social media has helped some independent business owners cope with the new restrictions, avoid temporary closures and make up for some of the sales lost due to Covid19. But, with so much uncertainty about what lies ahead and how long this situation will last, the future of many Canadian businesses is still on shaky ground.
Business owners pour their hearts and souls into their businesses – building them from the ground up, working long, grueling hours, taking risks and delving into the unknown. Managing a business during Covid19 has not been an easy undertaking for many business owners. A part of an entrepreneur’s identity feels lost when they are forced into permanently closing their independent business. But, it is important to remember that, as much as a business plays a big major role in an entrepreneur’s life, it does not define who they are – they are more than the businesses they own.
If you are an independent business owner who is dealing with closing your business due to Covid19, we are truly sorry to hear that. Permanently closing your business when you have worked tirelessly at building is not an easy decision to make, and we are here to support you and help make the process as easy as possible. It’s important to move through this end, so you can begin planning the next chapter of your life.
Why it’s important to cancel your business
When you decide to close your small business or corporation, it is important to put an end date to the operation of the business for a number of reasons.
For Sole Proprietorships and General Partnerships in Ontario, the registrations expire after their 5th year anniversary on their own if not renewed – however, they will remain active registrations until this point. This means they are part of the public record and will show as active businesses unless they are cancelled or expire. A Corporation does not have an expiry date and remains an active business entity until it is dissolved.
If accounts are registered with Revenue Canada, they may continue to expect regular tax returns and other filings for businesses that remain active. And, liability may be of concern if a business remains active and personal or property damages are caused.
How to cancel your business
If you decide to close your Sole Proprietorship or General Partnership due to Covid19, you can cancel the licence easily through filing a cancellation. It puts an end to the business, permanently closing it on the day it is filed.
For corporations, a dissolution would be filed to close the business. The corporation must be in good standing in order to dissolve, and depending on where the corporation is registered, the process to do this would vary.
For Ontario corporations, a letter of consent to dissolve would be required from the Ministry of Finance to submit with the Articles of Dissolution. This letter can be requested by calling 1-866-668-8297. The letter is valid for 60 days, during which you can dissolve the corporation.
Federal Articles of Dissolution are completed electronically. You will need to confirm that the corporation is not bankrupt or insolvent, and a director authorizing the dissolution would need to be named. A Federal Dissolution typically takes 1-2 business days to be completed.
Other things to keep in mind when closing your business
When closing your business, there are a number of things to consider, such as notifying Canada Revenue Agency (CRA), filing final tax returns, and paying any outstanding taxes and debt owed for the business.
If you have any CRA accounts, such as HST, payroll or import/export, you will want to contact CRA to have these accounts ceased. If these accounts remain active, CRA will expect to continue receiving filings as normal.
After all debts and financial obligations are paid, any business bank accounts should be closed down. A copy of the Articles of Dissolution or the cancelled business licence can be provided to the bank to show that the business has, indeed, been closed.
What comes next?
No one can say for certain when the effects of the Covid19 outbreak will end, and when we can start to see some semblance of normalcy return to life and the economy. But what happens next is completely up to you – it is important to look forward, because this will eventually be in the past and we will be able to get back to business.
Some entrepreneurs are trying to focus on the positive, where permanently closing their business has meant they are no longer working long hours and can now focus on other things they have not had time to do for years. Perhaps there is a project you have had in mind, but just have not had the time to dedicate? It may be a collaboration with other business owners to pool your talents into a new venture? Or, maybe it is taking some time off to spend with family or reviving an old hobby or passion that you have let drift aside.
Other business owners have looked for opportunities elsewhere, either within the same industry or are applying the skills learned as an entrepreneur towards a new venture. Whether you are looking at outside opportunities or creating new ones of your own, there are plenty of ways to apply your skills and experience of being a business owner.
And, when you are ready to get started again, Ontario Business Central provides resources for small businesses and is here to help you with your new business venture.
As a business owner, it’s important to take the right steps when closing your business. If you have any questions about how you can file a cancellation or dissolution, you can contact the Ontario Business Central team. We offer same day cancellation for Master Business Licences and 24-hour preparation for Articles of Dissolution.
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Ontario Business Central Inc. is not a law firm and cannot provide a legal opinion or advice. This information is to assist you in understanding the requirements of registration within the chosen jurisdiction. It is always recommended, when you have legal or accounting questions that you speak to a qualified professional.
Lisa is one of the corporate specialists at Ontario Business Central. She joined the team in 2018. Lisa has since been specializing in Non Profit/Charitable organization, Western Provinces registrations and incorporations, foreign corporations registering in Ontario and much more. Lisa offers her readers insights by providing helpful tips and assistance for entrepreneurs looking to register and grow their business. Her goal is to provide awareness, business ideas and how to guides. After completing her B.A. in Communications and Sociology at York University, Lisa started her own online business and took her passion for writing into the freelance world of sports writing for more than a decade. Lisa has a unique perspective as a business owner herself and understands the trials and triumphs associated with starting and running a business. Lisa strives to provide the highest level of service to each and every client she works with. You can follow Lisa on LinkedIn or she can also be reached at [email protected] | 1-416-599-9009 ext. 227