Closing or Winding Up Your Business
Closing a business is more than simply stopping trading. If you are no longer operating, there are tax, accounting and legal steps that may need to be completed to properly bring the business to an end.
Whether you are a sole trader, partnership or company, planning the closure carefully can help you deal with outstanding obligations, avoid unnecessary costs and make the transition as straightforward as possible.
When might you consider closing your business?
There are many reasons a business owner may decide to wind up a business. You may be retiring, moving into another venture, selling the business, restructuring your affairs or simply deciding that the business is no longer commercially viable.
Before taking action, it is important to establish the financial position of the business, including outstanding debts, tax obligations, assets, loans, shareholder or director current accounts and amounts owed by customers.
For a company, the process is different from simply stopping operations. A company generally needs to be formally removed from the Companies Register or placed into liquidation, depending on its circumstances.
Option 1: Voluntary removal from the Companies Register
If a company has stopped trading, has dealt with its assets and liabilities and meets the relevant requirements, it may be possible to apply for voluntary removal from the Companies Register.
Before applying, the company needs to have stopped carrying on business, distributed its assets and paid its business debts, with no creditors taking action to place it into liquidation.
The process generally involves:
1. Bring company filings up to date
Any outstanding Companies Office filings and tax returns should be dealt with before the removal application.
2. Complete the final tax requirements
The company needs to file its final income tax return and settle outstanding amounts with Inland Revenue. If the company is GST registered, its GST registration should also be cancelled and a final GST return filed.
3. Deal with PAYE and other tax registrations
If the company has employees, employer registration and final employment information need to be addressed. Other tax registrations, such as FBT, may also need to be cancelled where applicable.
4. Obtain an Inland Revenue no-objection letter
Before a company can be removed from the Companies Register, Inland Revenue requires a no-objection letter. This involves confirming that required returns have been filed, outstanding amounts have been paid, loans and current accounts have been dealt with, and company assets have been properly accounted for.
5. Apply to the Companies Office
The company can then apply for removal, providing the required shareholder resolution and Inland Revenue's no-objection letter.
Once the application is accepted, the Companies Office publishes a public notice. There is then a period during which eligible objections can be made before the company is removed from the register.
Option 2: Liquidation
Voluntary removal is not appropriate for every company.
If there are significant outstanding liabilities, creditors, disputes or other circumstances that need to be formally dealt with, liquidation may need to be considered.
Under Part 16 of the Companies Act 1993, a company can be placed into liquidation through the appointment of a liquidator. Depending on the circumstances, a liquidator can be appointed by shareholder special resolution, the board in certain circumstances, or the court.
Liquidation is a formal legal process and should be discussed with an appropriately qualified professional before proceeding.
What if you may use the company again?
Sometimes a business has stopped trading but the owner does not want to permanently close the company.
If the company meets the requirements to be considered non-active, it may be possible to submit a Non-active Company Declaration (IR433) to Inland Revenue. A non-active entity generally must not have gross income, allowable deductions or asset disposals, among other requirements.
Importantly, being non-active is different from closing or removing a company. It is a way of keeping an eligible company in existence while reducing certain tax filing requirements.
Since March 2026, Inland Revenue has also clarified that a non-active entity does not need to file nil income tax returns while it remains non-active.
Don't overlook GST when closing
GST can be an important part of the closure process.
If you stop your taxable activity, you generally need to cancel your GST registration. Inland Revenue requires a final GST return, and adjustments may be necessary for assets retained for private use or another business, as well as certain debtors and creditors.
This is one reason it is worth reviewing the company's assets and transactions before submitting final returns rather than treating GST cancellation as an administrative afterthought.
What happens to business records?
Closing a company does not mean you can immediately dispose of its accounting and tax records.
The Companies Office states that company business records must generally be retained for 7 years after removal from the Companies Register.
Keeping organised records can also make it easier to respond to any future questions from Inland Revenue or other parties.
Closing a business requires planning
The best approach depends on the type of business, its financial position and what you intend to do next.
Before closing, consider:
Outstanding tax returns and payments
GST and PAYE registrations
Business assets and their disposal
Loans and shareholder current accounts
Amounts owed by customers
Amounts owed to suppliers
Employee obligations
Company annual returns
Whether voluntary removal, liquidation or non-active status is appropriate
Record-keeping requirements
Getting the process right from the beginning can help avoid unnecessary delays and complications later.
How Tax Professionals Can Help
At Tax Professionals, we can help you work through the accounting and tax aspects of closing or winding up your business.
Our support can include preparing outstanding and final tax returns, assisting with GST and PAYE cessation, liaising with Inland Revenue, preparing information required for a no-objection letter and helping with the accounting steps involved in voluntary company removal.
Where a formal liquidation or legal advice is required, we can also help you understand the accounting and tax considerations and work alongside the appropriate professionals.
Thinking about closing your business? Don't leave the final steps until the last minute.
Contact Tax Professionals for practical advice tailored to your circumstances.