Closing your business

The steps you need to take will vary based on factors such as:

• The structure of your business, eg a sole trader, a partnership, or a company.
• Whether you are registered for GST.
• If you have employees.

To begin understanding the necessary procedures for closing down your business, you can refer to the informative video provided by Inland Revenue. It serves as a helpful starting point for the process.

Closing down your business

Before announcing the closure of your business, it’s important to prioritise collecting payments from your debtors.

Once you have announced your closure, there may be less motivation for them to make repayments.

When shutting down a company:

• Ensure you file all income tax returns until the date you cease trading and inform Inland Revenue about the closure.
• If you are registered for GST and/or as an employer with Inland Revenue, file all returns until the date you stop operating, and then proceed to deregister. Otherwise, you will be required to file nil returns.
• Make timely payments for any taxes owed to avoid penalties.
• If you have shareholders, consult with an accountant to discuss any tax implications that may affect them.

You will also need to submit an application to be removed from the Companies Register. Before doing so, ensure that your company’s details on the register are accurate, and confirm that your company has:

• Ceased trading
• Settled all outstanding business debts
• Distributed all company assets
• Reviewed any liabilities, such as rental agreements
• No creditors seeking to liquidate the company – refer to Insolvency and involuntary liquidation for more information.
• Obtained confirmation from Inland Revenue that there are no objections – refer to the “Income tax for business and organisations” section on Inland Revenue’s website for further details.

Companies Register – New Zealand Companies Office

Removing a company from the Register — New Zealand Companies Office

Closing down a company — Inland Revenue

Insolvency and involuntary liquidation

Income tax for business and organisations — Inland Revenue

After you have closed your business, it’s important to keep your business records for a minimum of seven years.

This applies to all types of businesses, including companies, sole traders, and partnerships. Refer to the guide on Keeping tax records for helpful tips and advice.

Keeping tax records

When ceasing your work as a sole trader:

• Ensure you file your tax return at the end of the financial year, even if you ceased operations partway through the year.
• If you are registered for GST and/or as an employer with Inland Revenue, file all returns until the date you stop operating, and then proceed to deregister. Otherwise, you will be required to file nil returns.
• Notify your accountant or advisor that you will no longer be self-employed.

Cancelling your GST registration — Inland Revenue

When you depart from or dissolve a business partnership:

• Submit a final income tax return for the partnership.
• Include your share of the partnership income or loss in your personal tax return.
• If you are registered for GST and/or as an employer with Inland Revenue, file all returns until the date you cease operations.
• Divide joint-owned assets (or proceeds from their sale) in accordance with your partnership agreement.
• Consult with Inland Revenue or an accountant to understand the rules and regulations related to leaving a partnership, especially if the partnership will continue after your departure.

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