Temporary closed down business

T2
1

Hi,

I have a client who is thinking of temporary closed down his small corporation because he just had a surgery done on his shoulder… so health issue. He a cleaner, so used hand a lot. But he would like to keep the corporation name in hope of coming back, depending on how soon he get clients back (as he lost all his clients before the surgery). He himself not sure about the timeline, but could be as soon as next summer, or as long as 3 years. And if it go too long, eventually he may decide to give up on his corporation.

Any suggestion on what he should do? Because of his uncertainty, I suggest him to close all his business related expense first, (eg. bank account) so to bring down the expense to 0 as he is not going to do anything, and file as an inactive corporation. Is this a good suggestion? Or is he actually better of filing as business dissolution, and later incorporate his business again? By doing this, does he have to go through all the incorporation registration process again? And will this mean his incorporation business name might be taken by someone while his corporation in dissolution?

Thanks,

2

Provided there is no business activity during the year (ie no income or expenses) it is not a complicated issue to file inactive T2 return(s) for as long as necessary. I have a couple of them that I file annually because the shareholders are not willing to dissolve the corporations, thinking there is a chance they will need the corp in future. You submit the Schedule 100 with the return but not the Schedule 125. Bank account does not need to be closed, but shouldn’t have any activity going through it, so the Schedule 100 balance sheet should be the same year after year.

Dissolving the corporation involves a little more leg work, including bringing the T2 returns up to date, but is not overly expensive either. In Ontario you can bring an corporation back to life by filing a MGS Form 15 (Articles of Revival) … unfortunately it costs the same amount as a incorporating a new corporation ($330).

I might want to go the inactive route for a couple of years and revisit at some point in the future when he is in a better position to make a decision to wind up and dissolve the corporation.

3

Thanks for the advice. :slight_smile: