What is closing a business?
Closing a business (also known as winding up, dissolution, or liquidation) is the formal process of permanently ending a company’s operations, settling its financial obligations, distributing remaining assets, and legally terminating its existence. It’s more complex than setting a business, which involves legal, financial, and administrative steps.
This article is showing the formal process, key considerations, and essential steps for voluntarily closing a business entity. It serves as a framework for directors, owners, and stakeholders to ensure a compliant, orderly, and ethical dissolution.
Why closing a business?
- Expiration of Business Term,the company’s operating period as stipulated in the articles of association has expired, or other dissolution conditions specified in the articles have been met.
- Resolution by Shareholders, Dissolution is decided through a resolution by the shareholders’ meeting or the general assembly of shareholders.
- Merger or Division, the company needs to be dissolved due to a merger or division.
- Administrative Revocation, the company’s business license is revoked by law, or it is ordered to close or deregistered by authorities.
- Severe Operational Difficulties, if the company faces severe management difficulties, and its continued existence would cause significant losses to shareholders’ interests with no alternative solutions, shareholders holding 10% or more of the voting rights may petition the court to deregister the company.
How to begin to close a business?
Closing a business is a significant decision, often driven by factors like retirement, strategic refocusing, market changes, merger/acquisition, or financial challenges. A structured closure process minimizes legal, financial, and reputational risks while fulfilling obligations to stakeholders.
Regardless of the nature of the liquidation, a company must follow these steps:
- Establish a Liquidation Group,
- Commence Liquidation Work,
- Notify Creditors to File Claims,
- Submit a Liquidation Plan.
When finish to complete the liquidation process , then the company will process with deregistration:
- Cancel the Tax Registration
- Publish a Deregistration Announcement in the system (Must wait 45 days before proceeding with deregistration)
- Close the Company’s Bank Accounts (If applicable)
- After 45 Days, Submit the Final Deregistration Application to the AIC
- Cancel relevant licenses (If applicable)
- Cancel the Company Seal with the Public Security Bureau.
Required Documents for Closing a business
- Business License (Original and Copy),
- All Company Seals (Official Seal, Financial Seal, Invoice Seal, Customs Seal, etc.),
- Seal Registration Card- If applicable,
- Financial Records of the Last Three Years (Including Financial Statements, Account Books, Vouchers, Bank Statements, and Tax Returns),
- Rent Agreements and Rent Invoices of the Last Three Years,
- Other Company Licenses (e.g., Customs Registration Certificate, Pre-approval or Post-approval Permits, etc.),-If applicable
- Tax System Passwords ( Tax Account Linked Mobile Number).
Why Choose Tannet?
- Professional Team Ensuring Tax Compliance
Tax policies are frequently updated, and regulations vary by industry. Tannet’s experienced tax advisors stay abreast of the latest policy changes to ensure compliance and mitigate risks from filing errors or delays.
- Cost Savings and Risk Prevention
Businesses can avoid the expense of building an in-house tax team. Tannet assists with document preparation, communication with tax authorities, and regular reviews of business processes (e.g., tax-related contract clauses) to prevent risks.
- Effortless Resolution of Cross-Regional Tax Issues
For businesses operating across multiple regions in China, Tannet can uniformly handle cross-regional taxes, coordinate local policy differences, and save time and costs.
Contact Us
Tannet Group Limited is in its sixth five-year development plan stage, and setting the upcoming two five-year plans. Tannet has been always devoted to providing with business solutions for investors all across the world. Should you have further inquiry, pls feel free to contact Tannet at 86-755-82143181, email to anitayao@citilinkia.com, visit our website https://tannet-group.net/.
