Last week we considered some of the challenges that can cause a small business to be unsuccessful. Despite your best efforts at preserving your enterprise, sometimes terminating it may be the only viable option.

However, it’s not enough to have a closing-down sale and take down your sign; there are several legal steps that are also required.

Here are the organisations in Jamaica that must be informed about your business closure:

1. Companies Office of Jamaica

The first step in officially cancelling your enterprise is to inform the Companies Office of Jamaica (COJ). If your business was being operated under a name other than your given name, you should have initially registered that name with the COJ. Similarly, you need to submit documentation with the COJ to complete the closure of your business.

If your business was originally registered as a Sole Trader, Partnership or Trading As Operation, and your business name certificate has not expired, then you need to fill out a BN6 form, return the original certificate, and pay a closure fee, which is currently $600JMD. Renewal of registration is due every three years at a cost of $2,000JMD, so if your certificate expired before the business closed, you would also have to pay this charge plus $1,000JMD  late renewal penalty for every un-renewed period.

For a business that was incorporated as a Limited Liability Company, it can be closed by being either struck off the register of companies or liquidated. If the company has no assets or liabilities, then you would need to submit an auditor’s statement verifying this status along with a letter from the company director(s) making this request to the COJ. The charge is currently $3,000JMD for removal and $1,500JMD for placing an official advertisement in the newspaper. You would also need to ensure that all annual returns and any other outstanding forms have been filed with the COJ.

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If your company still has assets and liabilities, then it would need to be liquidated. This is a more complicated process, as a liquidator must be appointed for both voluntary and creditors’ liquidation. Your attorney can guide you through the requirements of this legal procedure.

2. National Insurance Scheme

Write a letter stating that you have closed your business and take it to the nearest National Insurance Scheme (NIS) office. You will be asked to complete a closure form which is available free of cost. All the NIS payments for the business should be up to date; if not you will have to negotiate a payment plan with the compliance department.

3. National Housing Trust

Take in the original closure receipt from the Companies Office of Jamaica to the nearest National Housing Trust (NHT) office, along with a letter informing the NHT of the closure of your business. These documents should be submitted to the compliance department, where an officer will determine if you have any outstanding NHT returns before closing your account.

4. Inland Revenue Department

The tax authorities must also be notified about the closure of your business. You need to write a letter to the Taxpayer Audit and Assessment Department (TAAD) advising them that you have closed your business. There are several tax payments that will be affected:

. Income Tax and Education Tax:

Prepare your accounting records and file the annual tax returns for your business. On the return forms, make a note that states ‘final return’. These can be submitted as usual by March 15th of the year following your closure.

. General Consumption Tax (GCT)

If your business had sales of over $3 millionJMD annually, you should have been registered to collect GCT. If you were filing monthly GCT returns, upon closure you need to file a final return and send back the original GCT certificate with your payment. Once you have indicated that the business has closed, the TAAD will send an auditor to assess the business records.

Many people are not aware that failure to inform the tax authorities of the cessation of your business can be costly. Once you are still on the tax record, estimated assessments will continue to be generated for your business, and late payment penalties applied. Estimated assessments can be reversed if the tax auditor is convinced about the business closure date; and any disputes about outstanding taxes can be finally settled by the Taxpayer Appeals Department.

5. Taxpayer Registration Department

Your business Taxpayer Registration Number (TRN) also needs to be cancelled. Write a letter indicating the date of the business closure, which should be signed by the sole trader, one of the partners, or a company director, depending on the type of business. Take this to the nearest taxpayer registration centre, along with a valid photo identification of the signatory. You should receive a printout verifying the closure of your business TRN.

To avoid unnecessary complications and costs, don’t delay in contacting the necessary authorities once you have decided to close your business.

Copyright © 2009 Cherryl Hanson Simpson. No reproduction without written consent.

Originally published in The Daily Observer, October 8, 2009

Cherryl is a financial consultant and coach, founder of Financially S.M.A.R.T. Services. See more of her work at www.financiallyfreenetwork.com and www.financiallysmartonline.com. Contact Cherryl