Sometimes, the best business move you can make is to close it entirely. This can be for a variety of reasons, such as low profits, health issues, or retirement. A business can also close due to entirely unforeseen circumstances. For example, many businesses in the Philippines closed down due to the Coronavirus pandemic. Whatever your reasons may be for wanting to close a business, it’s important to follow the proper procedure for doing so. Otherwise, you could face tax penalties or illegal dismissal cases. Properly closing a business doesn’t just mean stopping all operations; you have to make sure that said business is closed in the eyes of the law as well. Here’s what you need to do, one step at a time. Employee Termination While this may seem obvious at first glance, it’s crucial to remember that you have to properly terminate all employees you may have before doing anything else. If you don’t, there’s a chance that you’ll one day have to face an illegal dismissal lawsuit. Be sure to inform all employees and the Department of Labor and Employment (DOLE) at least thirty (30) days before the date of termination. All terminated employees would also be entitled to separation pay, unless the reason for closure is due to serious business losses. Once DOLE has been informed and your employees have been properly terminated, you can start the process of closing your business with the following key offices. Notice to Barangay First, you will need to inform your barangay to get a Barangay Certificate of Closure. This will be one of your requirements when finalizing the closure with the Mayor’s Office later on. To do this, you’ll first need to write a letter of request for retirement or closure of business. When writing this letter, make sure to include important information such as the registered business name, the date of registration with the government, and your business permit number. Then, state your reasons for closing your business and your proposed date of closure. Finally, include a declaration saying that your business has no outstanding obligation or liability with the barangay. Once your letter has been processed, you will receive your Barangay Certificate of Closure. Notice to the City Hall / Mayor’s Office Once you’ve received your Barangay Certificate, you can move onto completing your requirements with the City Hall, or whichever Local Government Unit (LGU) that has authority over the business. Here, you will obtain your City Hall closure certificate, which is necessary later on with the Bureau of Internal Revenue. However, note that some requirements may differ depending on whether your business is a sole proprietorship, partnership, or corporation. Requirements can vary depending on which LGU you have to go to, so it’s best to double check with the appropriate authorities first. The requirements you must prepare include, but are not limited to: Once the City Hall has processed your closure, you will receive a City / Municipal Hall Certificate of Closure. Notice to the Bureau of Internal Revenue Closing your business without canceling your BIR registration means you will have to continue paying taxes for a business that is no longer active. You might even have to deal with penalties and interests, draining your money even further. Thus, it’s important to cancel your BIR registration as soon as you receive your City / Municipal Hall Certificate of Closure. The documents you must submit include: You will receive a BIR Tax Clearance Certificate once your BIR registration has been officially canceled. This document will prove that you have closed your business at the BIR and have settled all liabilities. Notice to the Securities and Exchange Commission Next, you’ll need a Certificate of Dissolution from the Securities and Exchange Commission. However, this is only applicable if your business is a partnership or a corporation. If your business is a sole proprietorship, you can skip this step. To secure a Certificate of Dissolution, be sure to prepare the following documents: Notice to the Department of Trade or Industry On the other hand, if your business is a sole proprietorship, you don’t have to go to the SEC. Instead, you need to cancel your business registration with the Department of Trade or Industry. Luckily, you do not have to prepare as many documents when canceling your business registration with the DTI. You only need to submit the following: SSS, Philhealth, and Pag-Ibig Finally, be sure to inform SSS, Philhealth, and Pag-IBIG of your business closure so that your business is cleared of any government regulatory obligations. Otherwise, these three agencies will assume that the business is still active and that it has stopped paying its remittances. This could lead to unnecessary fees years down the line. Once all of your obligations with the government are taken care of, it’s time to announce the closure of your business so that your consumer base knows what’s going on. After that, it’s only a matter of tying up loose ends and being able to say a proper farewell to your company before its official date of closure.