Many businessmen have ever wondered why they have to do the dissolution and liquidation of a company. It is common to think about solving what is failing, especially when billing decreases, and the numbers do not quite arrive.
Others have shown interest in proposing the inactivity of their companies to recover them when they are interested. All options are good if they are made for accurate, objective reasons. To help all of them, I have decided to cover this topic from my point of view.
Background in company liquidation
In Spain, many companies close yearly due to the economic situation, of which about 20,000 do so by proceeding to carry out/process their dissolution and liquidation.
Companies’ cessation of activity due to economic circumstances has recently increased, with many entrepreneurs opting to leave their companies “dormant” or inactive when conditions are not good. They were favourable.
Faced with this scenario, in which it is decided to cease economic activity, it is essential to look for solutions in this regard, or at least be aware of the consequences that the inactivity of society implies and propose the options that arise. They open from that moment on.
Pros and cons of dormant companies
In the case of choosing to maintain the inactivity of the company without seeking its extinction, it is essential to take into account that the tax obligations that the economic activity entails disappear (such as the liquidations of VAT, withholdings,…).
However, certain tax and commercial obligations remain:
- Corporate tax, as long as the company continues to exist;
- Annual Accounts, as long as the company continues to exist since otherwise the company’s registration page will be closed, and if the company is reactivated, the situation should be regularized;
- Legalization of Accounting Books.
The advantages of this option include the possibility of reactivating the company if there is a change in the situation or the possibility of selling the company.
As a counterpart, it must always be taken into account that the fact of maintaining a company without activity implies the subsistence of tax and commercial obligations throughout its existence, with the consequent expense that compliance with them means, without that there is no income on the part of the company.
The alternative to avoid the inconveniences related to inactivity, and as long as it is clear that economic activity is not going to be reactivated, is the dissolution and liquidation of the company to close the company and activity business, and extinguish the company and with it the expenses and obligations that come with it.
Dissolution or liquidation of companies?
It should be noted that there is the possibility of initially carrying out only the dissolution of the company and then opening the liquidation process while waiting to pay all debts and social assets. This step will be subject to a certain period, and in any case, the company will not be considered entirely extinguished and, therefore, will not disappear from legal traffic until it is dissolved and liquidated.
If opting for the option of dissolution and liquidation, the interest in the future continuity of the company or its disappearance must be considered. Its viability must be assessed, considering the requirements that must be given to agree on the dissolution and liquidation, especially those related to the non-existence of debts of any type on the company’s part.
Conclusions
In the end, you have to know what you want to do with the company. It is interesting to maintain it if you plan to activate it again in a while. If you’re not going to need it for anything else, you shouldn’t keep it. The best advice for this last case is to dissolve and liquidate your company.
It is always an excellent idea to go to a professional to help you make the decision that can benefit you the most to avoid problems in the future.
Has it become a little clearer to you? Do you have any questions that you want us to solve for you?
Leave A Comment
You must be logged in to post a comment.