Closing down a company in South Africa might sound tricky, but don’t worry! This guide will help you understand the process step by step. Whether your business isn’t doing well or you’re ready to try something new, it’s important to know how to deregister your company the right way.
What Does it Mean to Deregister a Company?
When you close (or deregister) a company, you’re telling the government that your business is no longer running. After this, your company can’t do business anymore, and it doesn’t exist as a legal thing.
Two Ways to Deregister Your Company
There are two main ways to close your company in South Africa:
- Automatic Closing
- Voluntary Closing
Let’s look at both:
Automatic Closing
This happens when you forget to do some important paperwork:
- If you don’t file your yearly reports for two years or more, the government starts to close your company.
- After five years of not doing this, your company is officially closed.
- But be careful! During those five years, you might have to pay fines for not doing your paperwork.
Voluntary Closing
This is when you decide to close your company on purpose. It’s usually faster and safer. Here’s how to do it:
- Make Sure Everything is Up to Date
- File all your missing yearly reports.
- Update your tax returns.
- If you haven’t done any business, still tell the tax office (file a “nil return”).
- Get Your Papers Ready
- Write a letter saying you want to close your company.
- Get a paper from the tax office saying you don’t owe any money.
- Get copies of the company owners’ ID cards.
- Send Everything to the Government
- Email all these papers to [email protected].
What to Put in Your Closing Letter
Your letter should say:
- Today’s date
- Your company’s name and number
- Your company’s tax number
- That your company isn’t doing business and doesn’t have any money or things of value
- Why you didn’t do your yearly reports (if you missed any)
- That you want to close your company
- It needs to be signed by at least half of the company owners
Getting Ready to Deregister
Before you start closing your company, do these important things:
Pay All Your Debts Make sure you’ve paid everyone your company owes money to.
Sort Out Your Taxes Pay any taxes you owe, including:
- Income Tax
- VAT
- PAYE
- UIF
Get a paper from the tax office saying you’ve paid everything.
Close Your Bank Accounts After paying everything, close your company’s bank accounts. Keep the final bank statements.
Take Care of Your Workers If you have employees:
- Tell them you’re closing the company
- Pay them what you owe them
- Give them the papers they need for unemployment
Cancel Any Special Permits If your business had any special licenses, cancel them.
Finish Up with Customers Complete any orders customers are waiting for, or give them their money back.
What Happens After You Send Your Papers
Once you’ve sent everything:
- The government checks your papers.
- They put a notice in the Government Gazette saying you want to close your company.
- They wait three months to see if anyone objects.
- If no one objects, they officially close your company and let you know.
After Your Company is Closed
Remember:
- You can’t use your company name for business anymore.
- If your company still owned anything, it now belongs to the government.
- Your company doesn’t exist legally anymore.
Problems You Might Face
Closing a company can be tricky. Here are some common problems:
Owing Money
- Problem: If you still owe money, people might object to you closing the company.
- Solution: Try to pay everyone before you close.
Tax Issues
- Problem: The tax office might stop you from closing if you owe taxes.
- Solution: Talk to a tax expert to make sure you’ve paid everything.
Missing Papers
- Problem: The government might say no if you forget some papers.
- Solution: Make a list of everything you need and check it twice!
People Disagreeing
- Problem: Sometimes, other owners or people involved might not want to close the company.
- Solution: Try to agree with everyone before you start, or ask a lawyer for help.
Other Options
Sometimes, closing your company might not be the best choice. You could:
Keep the Company But Don’t Do Business You can keep your company registered but not do any business. This is easier if you think you might want to start again later.
Try to Fix the Company If your company is in trouble but might get better, you can try to fix it instead of closing it.
Sell Everything to Pay Debts If your company owes a lot of money, you might need to sell everything it owns to pay people back.
Conclusion
Closing a company in South Africa takes some work, but if you follow these steps, you can do it right. Remember, every company is different. If you’re not sure about something, it’s a good idea to ask a grown-up who knows about business laws for help.
By closing your company properly, you make sure you’ve done everything right and won’t have problems later. Take your time, follow the steps carefully, and soon you’ll have finished this part of your business journey in South Africa.
