Ready to take a step back from your small business? Whatever your motivations for closing may be, you can’t simply put a “closed” sign up on the door and turn out the lights.
Regardless of how your business is structured, it will be attached to you in some way (if you’re an owner or co-owner). So, when the time comes to move on, you’ll need to follow the proper legal and logistical steps to either close the business or sell it.
In this blog, we’ll touch on how to dissolve a business in Ontario. Keep reading for more insights.
The Importance of Succession Planning
Succession planning is an important part of being a business owner. Even if you have no immediate intentions to step away, it’s never too early to start preparing for this transition down the road.
Whether you’re thinking about closing your business, transferring ownership to an associate, or selling it, you can expect an involved and logistics-heavy process. With that in mind, outlining your specific plans and timeline in advance is a great step.
You don’t need to decide on all the details right away, but it is a good idea to think ahead and prepare for the various steps you’ll need to take when the time comes.
Searching for tips on selling your business? We’ve got plenty on our blog.
- How to Sell a Business Quickly
- How to Sell a Business in Ontario
- Can I Sell My Restaurant If It’s Not Profitable?
I’m Selling My Business, What Are My Options?
Every business has some degree of value, and when you’re ready to move on from your business, you’ll want to hold onto as much of your equity as possible. Rather than simply fold your business and donate or throw away all the assets, it’s worth approaching the marketplace and considering your options.
As you do this, there’s one key distinction to keep in mind: there’s a difference between selling business assets and selling the business itself.
Sole Proprietorships & Partnerships
In Ontario, you can sell assets belonging to a sole proprietorship or partnership; however, you can’t formally sell or transfer the business registration. You must close the business and settle up any accounts individually. If someone wants to use your business’s likeness going forward, they’ll still need to register on their own.
Searching for tips on selling individual business assets? Read our blog about selling restaurant equipment.
Selling a Corporation
On the other hand, corporations can be sold to another individual or company. When this happens, the business remains active as the registration is transferred from one party to the other.
If you don’t want to sell your corporation (or don’t think it’s worth it), you can choose to simply shut it down – this is known as dissolving the business. That being said, it’s a good idea to speak with a business broker or commercial real estate agent before dissolving. They can help you decide if selling may be the better option based on your circumstances.
How to Dissolve a Corporation
To close your business completely, you’ll need to dissolve it. From a legal standpoint, this can get complicated in a hurry. Speak to your lawyer for direct guidance if needed.
A corporation can only be dissolved after its liabilities have been discharged and its property has been distributed. If you haven’t already done so, this will be step one. Once you’ve distributed all assets and properties, it’s time to file the proper Articles of Dissolution – this is the most important part of dissolving a business in Ontario.
How to File Articles of Dissolution
Dissolving a business through the Ontario Business Registry is fairly easy, and you can do it all online. However, you’ll need to provide a number of essential details and confirm certain details regarding your operations, including:
- The name of your corporation or numbered corporation name
- The name of a business director, including an officer of the corporation
- The name of the person authorizing the dissolution process
- The date of dissolution
Keep in mind that a processing fee may apply. You can also complete and file your Articles of Dissolution with an intermediary service provider, such as Ontario Business Central, which can guide you through the process from start to finish while keeping things simple.
Sell Your Business With Carve Real Estate
Closing a business in Ontario is an intricate process, and it may not be your only option if you’re looking to move on to your next chapter. When it comes to selling, the best thing you can do to maximize your results is to partner with a professional business broker or real estate agent. That’s where we come in – Carve Real Estate.
Beyond our team’s industry-sprawling expertise, our specialized selling strategies and direct connections to industry players can expose your business to a more relevant and qualified pool of potential buyers, contributing to a smooth and successful sale.
Need to sell your business? Carve Real Estate can help! Reach us at ryan@carverealestate.com or call 416-618-0054.
