No longer need your company? You should think about deregistering it

If you’ve stopped trading your company and don’t plan to do so again, it’s a wise idea to close your company.

Why?

If you don’t officially close your company – so it ceases to exist as a legal entity and can’t carry on business – you will still have to meet your officeholder obligations, including paying your annual review fee and keeping company details up-to-date.

If you do decide to close your company you can always reinstate it – but in the mean time save yourself the hassle and close it down.

Apply for voluntary deregistration

You can apply for voluntary deregistration by lodging an application for voluntary deregistration of a company but you need to make sure you meet certain criteria first, such as:

• Ensure all company members agree to deregister
• Make sure the company’s assets are worth less than $1,000
• The company has no outstanding debts
• The company has paid any ASIC fees or penalties
• Ensure the company is not involved in any legal proceedings
• The company is not conducting business

If you don’t meet the above requirements, you should consider winding up your company.

Winding up your company

Winding up your company is another way to go about closing it if you don’t meet the requirements to apply for voluntary deregistration.

To wind up your company you must:

• Cease operations or sell the company
• Pay any outstanding debts
• Appoint a liquidator to manage its assets

Remember, you can only wind up a solvent company.

What happens once the company closes?

If your company has been deregistered, it ceases to exist as a legal entity and can’t act within its own right.

But you can always apply to reinstate the company if you change your mind.

This restores the company to ‘registered’ and allows you to continue trading under the company.

But only the director of the company when it was deregistered can apply to ASIC for reinstatement.

Remember, if you applied for voluntary deregistration, you must prove an error was made and that the company was still trading.

If you can’t meet these requirements, you can apply to the court to ask ASIC to reinstate your company.

If you’d like any help closing your company, contact us and we can walk you through it.

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