Brief Introduction:
Winding up or closing of a business is the process of voluntarily or compulsory
cancelling/shutting down the business along with its all related activities, licenses, approvals, Registrations and distributing its assets to its creditors and shareholders.
The winding up of a business is as important as its starting or in some cases more important.
Reasons for Winding up :
There can be many reason of which what mainly can be are mentioned below.
Bankruptcy; A situation where business is unable to pay its liabilities
Insolvency; where business cannot make payments on time
Shifting to a new business
Personal Reasons
In case of Death
Court Order
Continuous Losses
Process of Winding up of Business :
In order to ascertain the process we first must identify the form or structure of business in
which it was constituted. So process of winding up or closing depending upon whether
it is a Sole Proprietor, Partnership/Firm or Company.
Winding up/Closing of Sole Proprietorship :
Business registration is the process of formally establishing a A business individual mainly register itself in FBR for NTN (National Tax number) and STRN (Sales Tax Registration Number).
So a sole proprietorship business needs to be close done main in FBR through an application
to relevant Commissioner for removal of business and STRN from its name. After going
through all relevant documents and audited accounts, if found satisfactory the relevant
officer will the remove business from individual name and mark it closed.
The owner may further approach to cancel any additional registration from the relevant authority
(where applicable) like Pakistan Engineering council, Chamber of Commerce Industry and professional tax.
Winding up/Closing of Partnership/Firm :
If your business is registered as a firm under the Registrar of the firms then, after completing all the relevant process and documentation,
(1) first you have to approach Registrar of firms. After the due verification the Registrar of the firms will close the firm and issue you a certificate.
(2) Secondly you need to approach the FBR for winding up of NTN and STRN of business.
(3) Further any additional licenses and registration you may approach the relevant authority.
Winding up/Closing of Company :
The process of windup of company may also vary depending upon its form like Single Member Company, Private limited company, public or foreign but mainly following process is followed for the closure of the company.
Winding up of company mean the putting the life of a company to end. Like a natural person company also needs to take care of all of its affairs in the process carefully.
During the process of the winding up of company, Assets are disposed, Debts are paid off from the sold assets proceeds. If any surplus is left it is distributed among the shareholders.
The process of winding up begins as soon as the court passes the order for winding up though a liquidator and which is also appointed by the court.
Once above mentioned due process is completed, the its further cancellation is requirement in all the Government and Private bodies where it was registered like FBR, PEC, CCI, Excise & Taxation, Customs, BOI (Board of Investment) etc.