Tax Planning When Closing Your Business Doors
Building a business is not something that is done overnight and any long standing business owner will most likely tell you that their business demanded many years of their time over the years. Often small business owners begin their business with the hopes of it becoming a family business that will thrive and be able to be passed down through the generations.
Unfortunately our youngsters as they grow up develop their own ideas of what they want for their future by way of a career and it may not include taking up the torch of the family business even though it is financially stable.
It may come to a time where the business doors will have to be closed for the last time. This should be done with some tax planning in mind. Not only for the successful closure of the business from a financial standpoint now, but some financial planning for the future of the owner. Once the business has been closed it will no longer be the source of income that it may have been for many of the prior years.
The closing will be a busy time as there are a lot of loose ends to attend to. One final step that will have to be taken is taking care of the final tax matters for the business. You will have to file an application for dissolution with the appropriate government body that handles your corporation. You will also need to file a final tax return for the business. Be sure to use a qualified Toronto accountant if your is a Toronto or surrounding area business that you are terminating. It is important that all of your accounts with the CRA are closed properly.
Hopefully you have left yourself some time to prepare financially before ceasing the operation of your business. It is going to take you a while to adjust to the different level of financial income that you will now have. Perhaps you have started collecting your pensions and have done some saving over the years. By having these to rely on you will not find it quite so difficult to manage money wise. If you don’t have these resources then prior to ceasing your business you may want to make some solid plans for income generating so the transition is not so stressful.
Hopefully you have had the option of selling your business rather than just closing its doors. This will give you some extra income, and for planning for the future years, what you do with this money is going to be part of it.
Closing a business is not an easy choice to make especially if it has been a family run business over the years. There does come a time however, when this may be the best choice. Before making the final decision to do so, you may want to discuss this with your accountant to gain a clear understanding of just where your business stands financially at the moment, and what your tax implications will be should you decide its time to close up shop.