Think Winding Up Your Corporation Is Easy? Think again…

Think Winding Up Your Corporation Is Easy?  Think again...When a business comes to the end of its useful life, many business owners think they can simply wind up operations, take out the remaining cash, and that’s it-the business is over.

Unfortunately, that’s not the case. A corporation, being a separate legal entity, lives on and doesn’t cease to exist just because the operations cease, or just because all the assets have been removed. There still remain obligations and financial constraints that will need to be dealt with in the future.

The actual process of winding up a corporation takes some time and effort, as well as a lot of back and forth.

Here is a snapshot of the process to wind up an Ontario corporation:

  • An application for consent to dissolve the corporation must be made to the Ministry of Finance. This can be done in the form of a phone call indicating the intention to dissolve.
  • Government will then review the corporate status to ensure everything is up-to-date and there are no outstanding government debts. If everything is in order, the Ministry of Finance will issue a “Letter of Consent to Dissolve Corporation”, granting permission to dissolve.
  • Once the Letter of Consent is granted, the Corporation has 60 days to file Articles of Dissolution with the Ministry of Government Services.
  • Government will review and approve the dissolution. The Articles of Dissolution will be returned and stamped with the date the corporation is officially dissolved.
  • Once the approved dissolution is received, the corporation must file a final corporate tax return for the period up to the date of dissolution.
  • Finally, once the Notice of Assessment for the final corporate tax return is received, an application to close the business number associated with the corporation must be filed.

If the corporation you want to close is part of a corporate group that is on-going, it may be easier, faster, and even cheaper to amalgamate the corporation with a continuing business rather than wind it up.

You cannot merely ignore the corporation and hope it goes away as this could leave you with much bigger and more expensive headaches in the future.