At Ownr, we help people start their businesses, but it’s true that sometimes folks need to move on from what they’ve started. Perhaps they’ve incorporated, but never really got your business off the ground, or maybe the business is no longer viable. It can be a change in interests, or maybe the business owner is retiring and doesn’t have a succession plan. Whatever the reason, business owners sometimes find themselves in the position of wanting to close up shop.
If you’re in this situation and your business is incorporated, you have the option to dissolve it. However, there are some good reasons to keep your corporation, even if you’re closing down your current business.
Dissolving a corporation is a legal process in which the corporation, as a legal entity, ceases to exist. An inactive corporation may just sound like a corporation that isn’t currently being used, but in legal terms, it refers to a corporation that has ceased business operations but continues to exist as a legal entity.
While there is some upkeep involved in maintaining an inactive corporation, such as continuing to file your annual return and tax return even if you aren’t generating revenue, but there are some real benefits to consider.
How do I decide if I should dissolve my corporation?
Choosing whether to dissolve the corporation or maintain it will ultimately come down to a couple of factors.
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If you’re planning to start a new business or make some other pivot in your career, it might make sense to keep the corporation—you can change the name and use it for your new business. This saves you the time and money involved in incorporating a new business. There could also be tax implications to dissolving immediately rather than maintaining your current corporation—it’s best to consult an accountant for a full picture of tax implications.
If you aren’t planning on being in business again and don’t want to deal with the responsibility of keeping up with your annual filing requirements, the better choice for you may be to dissolve the corporation.
How do I Dissolve a corporation?
The Government of Canada’s guide to dissolving a corporation states that a