Originally Published on Jan 30, 2019
If you are no longer operating your business, closing your business by cancelling either your Sole Proprietorship, General Partnership, Tradename or Incorporation with the Province is an important step to finalise the end of the business operation. Until a business licence is cancelled, it will remain active until its expiry date. In the case of an Ontario corporation, it has no expiry date and will remain active until it is dissolved.
There may be tax implications and liability obligations for a business that remains open and legally active, even if they are not actively doing business. Ensuring that all legal requirements and steps to closing the business are followed can help avoid considerable problems and headaches from arising.
Why Should I Cancel the Registration or Incorporation?
Revenue Canada/Minister of Finance
When you first established the business, whether you registered a small business or incorporated, details of the business set up were provided to Revenue Canada. If you have filed any tax returns, Revenue Canada and the Minister of Finance have insight into what revenues are being produced by the business, and there is an expectation of continued revenues and taxes based on previous tax filings.
We have had a few clients who had stopped business operations but didn’t file a cancellation or dissolution to close the business with the Province. Revenue Canada imposed revenues to the business based on the previous tax filings, and there may be tax implications for an active business or corporation. When these business owners stated that the business was no longer in operation without proof of the cancelled business, Revenue Canada required audits to verify the business was no longer operational. This included business owners being required to provide historic details of suppliers, bank account information; client lists etc. to ensure the business is no longer operational. This can happen years after the business has been closed.
As long as the business remains active, the opportunity for liability continues whether the business is operational or not.
Provincial Data Bank Search
When you have registered a Master Business Licence as a Sole Proprietorship, General Partnership or Tradename, the registration details including the owners of the business remain within the public database for individuals to search and obtain the details. When you have canceled the Master Business Licence, the registration itself becomes archived and not as accessible to public viewing.
To Cancel/Dissolve Your Business
Sole Proprietorship, General Partnership or Tradename
In Ontario, there are two types of businesses – small business registrations and corporations. Depending on how you are registered, the process to close the business will be different.
To cancel an existing Master Business Licence, now known as a Business Name Registration, as a Sole Proprietorship, General Partnership or Trade Name in Ontario, a cancellation must be filed with the Province of Ontario. If you would like, we can assist you with completing this filing to cancel a business registration.
The cancellation information that is required is as follows:
- Business name
- Business address
- Activity of Business
- BIN number (9 digit number listed on your current registration)
- Your name and any other owners as registered initially
Articles of Dissolution For an Ontario Incorporation
If you would like to cancel your Ontario incorporated company, Ontario Articles of Dissolution are required. We can assist you in preparing and filing these documents. A consent letter from the Minister of Finance to dissolve was required historically by the corporation prior to submission of the Articles of Dissolution but the Provincial government since October 2021 has made the consent process intergovernmental so you as the business owner are no longer required to obtain this. The Ministry of Finance will still provide consent before the dissolution is approved, however this is now done together as part of the same filing.
There are a few questions that are required when completing an Ontario dissolution. If your corporation has debts and obligations, these are to be satisfied prior to filing the dissolution. If the corporation owns property as part of its assets, the property is required to be distributed. Any outstanding tax returns with the CRA, including HST remittances and payroll account filings, may need to be submitted first before approval will be given by the Ministry of Finance to consent to Articles of Dissolution being approved.
The first requirement when completing the Ontario Articles of Dissolution is to confirm whether the corporation has or has not commenced business. For those corporations that have not commenced business, the process is very simple. For those who have commenced business, you will need to select if there are no debts, if the debts have been provided for or if consent has been provided by creditors to dissolution.
What Needs to be Done After Closing Your Business?
One of the steps to closing your business or corporation is to ensure that you close accounts related to the business. There may be legal requirements and financial obligations that need to be taken care of, including filing final tax returns, closing the business bank account and closing CRA accounts, including an HST and Payroll account.
You may need to provide the cancellation document for your sole proprietorship, general partnership or tradename or the Articles of Dissolution for your corporation in order to close accounts for the business. Any CRA accounts are not automatically closed when the business is cancelled or dissolved, and there may be financial or tax implications if these accounts remain active.
Your Checklist for Closing Your Business
- Ensure all outstanding debts and obligations are settled
- Inform your business contacts, suppliers and customers that you will be closing
- Cancel the business registration or File Articles of Dissolution
- File a final tax return, if you have dissolved a corporation
- Close any CRA accounts, including an HST registration or Payroll account
- Close your business bank account (you may need to provide the bank with your business name cancellation or Articles of Dissolution)
- Keep your cancellation or dissolution documents in your business records
If you would like us to assist you in completing the filing of the Articles of Dissolution for your Ontario incorporation with the Province of Ontario, here is the link to do so:
If you have any questions about completing cancellation or dissolution of your business, please feel free to contact our staff for additional information and assistance.
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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.