So you have a business that isn’t working out and feel the need to deregister it, here is what you need to know.

How do I close down my business?

A business can only be closed down in two ways either by

• deregistration – according to CIPC, A business can be referred for deregistration upon request from the company or close corporation or any other third party, provided that the company or close corporation has ceased to carry on business; and has no assets or, because of the inadequacy of its assets, there is no reasonable probability of the company or close corporation being liquidated.
• Liquidation – according to the CIPC Liquidation implies that the business is not able to pay its debts.

Deregistration

To deregister a company there are 3 steps to follow:

1. Write a letter to CIPC

The letter must include the following statement confirming that:

• • The company or close corporation is not carrying on business or is dormant; and
  • Has no assets, or because of the inadequacy of its assets, that there is no reasonable probability of the close corporation being liquidated
  • the letter must be signed by each active member of the business
  • Tax number.

2. Prepare supporting information

• Tax clearance certificate
• Certified ID copy of any of the persons signing the letter wherein deregistration is requested;
• If a third party is applying for the deregistration, documentary proof must be submitted confirming the statement that the company or close corporation is not carrying on business or is dormant and has no assets

3. Scan and email the letter and attachments to  deregistration@cipc.gov.za

According to Lebogang Tsele of SME South Africa (16 May 2016 publication) there are a few other factors that need considered before completely closing down:

• your employees

The employees are usually the worst affected by the shutting down of a business, it is therefore important for the business owner to handle employee-related issues with care. This includes ensuring that employee benefits such as retirement annuities and medical aids are dealt with adequately.

• contractual obligations

Contracts should not be neglected when the company closes down. Unfulfilled contractual agreements can easily come back to haunt you.

• take care of director and shareholder liability

Deregistration of the company does not affect the liability of any former director or shareholder of the deregistered company in respect of any act or omission that took place before deregistration. These liabilities will continue and may be enforced as though the company had not been deregistered

• Taxes

Once a business receives confirmation from the CIPC that it has been deregistered, the registered representative should visit their nearest SARS branch and make sure the business is deregistered for all the various types of tax.

Disclaimer: this is general advice and should be relied upon solely, consult a professional before proceeding with the deregistration of your business