There are many reasons why businesses close. It could be due to bankruptcy, failure to comply with the law or for a better reason like remodeling the business from a partnership to a corporation. Whatever reason it may fall under, a business needs to file for a business closure to respective government agencies and submit the necessary requirements. Otherwise, your business will incur penalties because the government will think that you are still operating.
The common government agencies are Local Government Units (LGUs) such as Barangay and City Hall, Bureau of Internal Revenue (BIR), Securities and Exchange Commission (SEC), Philippine Economic Zone Authority (PEZA), Bangko Sentral ng Pilipinas (BSP) (if the business is money related), and if you are registered with SSS, Pagibig, and Philhealth.
What we’re going to tackle now is close a business in the Philippines for Corporations. It is laborious and difficult. If you think that registering a business is time-consuming, get your patience ready for the waiting game of releasing the certificates. For your reference, here is the step by step process on how to close a business in the Philippines.
- Latest Barangay Clearance (original and copy).
- Letter of Request for Retirement.
- Any of the following (must be notarized:
- Board Resolution.
- Secretary/Director’s Certificate.
- Affidavit of Business Closure.
- Complete the above-mentioned requirements.
- Submit all the documents at the barangay where you are registered.
- Pay the necessary fees.
- They will receive your requirements and they will give you a Certificate of Closure. In some cases, you can get it the same day or they will inform you when to get back.
- Board Resolution
- Articles of Incorporation
- Amended articles, if any
- Letter request for retirement
- Audited Financial Statement & ITR for the three (3) preceding years of the retirement date.
- Original Mayor’s Permit (If lost, submit an affidavit of loss).
- Official Receipts (from the City Hall)
- Monthly and/or Quarterly BIR Returns / ITR for the current year.
- Certification of Gross Sales for the current year duly certified by an accountant.
- Authorization letter for representatives/liaisons together with the ID of both signatory & representative.
- Cedula / CTC for three (3) years of the retirement date.
- If no operation, submit the Affidavit of no operation.
- Certification from Barangay stating actual closure of the business.
- After getting the Certificate of closure from barangay, complete all the requirements above and go to city hall where you are registered.
- Get a form at the city hall for retirement and fill this up. It should be signed by the owner. Remember to notarized it.
- Submit the notarized form together with other requirements for assessment.
- They will give you a claim stub, they usually put a date on when to follow up (usually after a month).
- Once you follow up and the city hall said that your certificate of closure is ready, go back to the city hall and pay the necessary feed first before they release the certificate.
Note: You need to submit the request for business closure within 30 days after you have submitted a request from the barangay. Otherwise, there will be penalties for late filing.
BUREAU OF INTERNAL REVENUE
- Letter Request stating the reason for termination.
- Original BIR Certificate of Registration.
- Books of Account / Ask for Receipts Poster.
- Inventory List of Unused Receipts / Invoices.
- Unused Receipts / Invoices for Cancellation.
- Board Resolution / Notice of Dissolution.
- Latest ITR with Financial Status (for 3 years).
- Interim ITR with Financial Statement.
- Verification Slip (CMS).
- Form 1905.
- Latest form 0605 for annual registration.
- Certification from the City Hall that the business has “Retired”.
- Authority to Print (ATP) issued.
- Delinquency Verification
- Go to your RDO and get a BIR Form 1905. Fill that out and submit it to your RDO together with all the requirements above.
- Go to TIN Issuance counter to have your 1905 stamped. Make sure to get your copy of stamped 1905. It is your proof that your TINis already canceled, and you don’t need to file any tax returns.
- Submit all the requirements to the examiner for assessment. If all the documents are complete, they will tell you to follow up again usually after 1 week.
- Just in case BIR tells you that you forgot or missed filing one tax but you did file it, just submit the form you filed before together with the confirmation email then wait.
- In the event that you really missed filing, just file the form online, and pay the necessary fees and penalty at the Authorized Agents Banks (AABs). Then submit it to your RDO and wait again.
- Once you’re cleared, they will release your Certificate of No Liability.
SECURITIES AND EXCHANGE COMMISSION (SEC)
- Director’s Certificate
- Articles of Incorporation
- Amended Articles of Incorporation (if any)
- Audited Financial Statements (AFS)
- Certification by the President and Treasurer
- BIR Tax Clearance Certificate
- Publisher’s Affidavit of Publication
- Endorsement / Clearance from Other Departments / Government Agencies (if applicable)
- Notarized Secretary’s Certificate
- Since this is the last step in closing the business, SEC usually won’t ask anything besides from the requirements.
- After submitting, you will wait 3-4 weeks before the release of the certificate.
Just because you stop operating or decided not to continue your business (if no operation), doesn’t mean that you are no longer required to file your obligations to the government. Whatever your reason is in closing a business, you need to file for the retirement of a business or else you will incur penalties if you stop filing government’s requirements such as taxes, etc.
Depending on the status of a business, closing a corporation in the Philippines can take more than a year. To save you from hassle and stress, you can just hire an expert who will process your business retirement for you.
Get in touch with us and let our consulting expert process your business retirement!