The reason for the strike-off of a company may vary – it can be due to bankruptcy, a merger, or just the decision to close down a business.
Whatever the reason may be, striking off a company involves certain steps that must be followed to ensure legal compliance. To strike off a company, there are a few essential steps that need to be taken.
Here are the 3 key steps to strike off a company so that the process is done in a legal and compliant manner.
1. Create a formal agreement to strike off the company
Unless you are a sole proprietor (sole proprietors can strike off a company on their own), it is necessary to agree with all the other shareholders and boards of directors in your company.
A voting system might be necessary to strike off a company, which would involve all board members voting on whether or not to close down the business.
If you win the majority of the vote, then it is time to move forward with the strike-off process and create a formal agreement that will be signed by all shareholders. And if you do not win the majority of the vote, it is important to seek professional legal advice on how to proceed.
Let’s say you won the voting – now it’s time for the paperwork – you have to apply the strike off of your company.
Here is the list of information that you might need to provide
- Company details (company name, registration details, etc.)
- Reason for the strike off
- The agreement signed by all shareholders.
- Information about any pending liabilities
- Details about any assets owned by the company, etc…
Once you are done with the paperwork, you have to cancel your employer identification number (EIN) and any relevant licenses that were used by the company.
You have to report to the tax department about cancelling your EIN and also let your state government know that the company is no longer in business.
2. Don’t forget about your employees
Before you strike off a company, it is important to make sure that all the employees involved in your business have received their wages and any other entitlements due to them.
It is important to check with your local labour regulations and make sure that you comply. It is also important to make sure the employees know about the strike off of the company and their rights related to it.
Here is a list of the things that you need to consider informing your employees about:
- The strike off of the company and when it will be effective
- Their rights related to the strike off, such as employment termination notice and severance pay (if applicable)
- Information about any unused vacation or sick leave days
- Details about their pension plans, etc…
- Paying out any unpaid wages, etc…
3. Pay off your taxes and outstanding debts
And last but not least, striking off a company means that you have to pay all of your taxes and any outstanding debts.
It is important to make sure that all the necessary paperwork is filed to strike off the company and that there are no unpaid liabilities. Also, make sure to keep a record of all payments made in case you need them later.
Maybe you are closing your business, but you are still liable to pay your taxes. You have to make sure that all the tax returns for the business have been filed and taxes paid off if you have any.
Now when it comes to your creditors and suppliers, you must inform them about the strike off of the company. It is important to make sure that all outstanding payments are made and that there are no unpaid liabilities.
Whether it’s the unpaid invoices or pending loan payments, striking off a company process will not be complete until all these debts have been paid.
Conclusion
So, there you have it! These are the 3 key steps to strike off a company. Although it may seem daunting at first, following these steps can ensure that you are compliant with all the relevant laws and regulations and that you do not leave any unpaid liabilities behind. Make sure to do your research and if you have any doubts or questions, consult a professional. Good luck!
